UK services PMI preview: What to expect of GBP/USD?

The UK economy will release its July services PMI later in the European session at 0830GMT, which is forecast to remain unchanged at 47.4 as seen in July. 

The business activity in the UK’s services sector is expected to stay muted last month, given the stabilisation in the political climate seen since mid-July. However, risk remains to the downside as investment sentiment and business confidence continue to remain clouded in light of the Brexit vote.

A further deterioration here would certainly raise the stakes further for BOE at its rate decision due tomorrow, with markets expecting the central bank to slash rates for the first time in seven years.

On a weaker PMI print, we could see GBP/USD falling back towards the key 1.3200 levels, while a better show could enhance the recent upbeat momentum seen in the cable, thereby, driving the rate towards 1.34 handle.

GBP/USD Technical Levels:

Haresh Menghani, Analyst at FXStreet explains, “A follow through selling pressure below 1.3300-1.3280 immediate support seems to accelerate the fall back towards 100-SMA (4-hourly) support near 1.3200 round figure mark. On a sustained weakness below 1.3200 support, the pair seems to extend the slide, even below 1.3100 handle, towards 1.3060-50 strong horizontal support.”

“Meanwhile on the upside, resumption of the pair’s near-term bullish momentum now seems to confront strong resistance near 1.3400 confluence region, comprising of a short-term descending trend-line and 200-SMA (4-hourly) resistance. A convincing break above 1.3400 strong resistance now seems to assist the pair to extend its near-term recovery trend and break through July monthly high resistance near 1.3475-80 region.”