GBPUSD trade opportunity post UK Services PMI

UK Services PMI has beat expectations strengthening the country’s economic outlook after the vote for Brexit. The following is GBPUSD trade opportunity post UK Services PMI.

05 October, AtoZForex – UK Services PMI has beat expectations of 52.1 and was released for September at 52.6. It’s a leading indicator of the country’s economic health as businesses react quickly to market conditions, especially after the vote for Brexit.

UK Services PMI beats expectations

The data has strengthened UK’s economic outlook post Brexit. From the official IHS Markit publication:

The UK service sector continued to recover from July’s EU referendum-induced shock, according to PMI® survey data for September from IHS Markit and CIPS. Business activity rose for the second month running, following a sharp drop in July linked to uncertainty surrounding the UK’s vote to leave the European Union. Moreover, new business rose at the fastest pace since February and the rate of job creation picked up. However, future expectations remained very low by historical standards and the survey recorded the sharpest increase in service sector input prices in over three-and-a-half years.

However, looking at GBPUSD the reading seems likely be overshadowed by US ISM Non-Manufacturing PMI scheduled later today at 15:00 BST as investors seek further clues to reinforce Richmond Federal Reserve President Jeffrey Lacker comments.

He reiterated his view on Tuesday of a strong case for raising US interest rates, arguing that borrowing costs might need to increase materially to keep inflation expectations under control, supporting the USD across the board.

Technical GBPUSD analysis after UK Services PMI

As we discussed at the daily GBPUSD technical analysis, the pair continues to trend lower. Following price rebound from a dynamic resistance of 20 SMA the price reversed ahead of UK Services PMI release resulting in a fake breakdown.

GBPUSD trade opportunity post UK Services PMI Hourly GBPUSD trade opportunity post UK Services PMI (click to zoom in)

Nonetheless, our next targets remain to be placed at Fibonacci 150% retracement level and Fibonacci 160% retracement zone at 1.265 and 1.260 respectively, from where a stronger correction would not be surprising. Meanwhile, resistances are located at 1.2745 and 1.279 levels. So far, the best risk/reward Forex opportunity is to short GBPUSD from Fibonacci 123.6% retracement level at 1.279.

Also see: Daily USDCAD & GBPUSD technical analysis

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