Service-sector activity in the UK surprisingly decelerated in June, a private survey from Markit Economics reported. Markit's services purchasing managers' index released today fell to 52.3 in June from 53.5 in May. The market expectation was for an index reading of 52.7. It remains in a territory above 50 points, which indicates expansion in the industry, while below 50.0 indicates contraction. The closely watched gauge was at its lowest level since April. Growth over the second quarter was the lowest since the first quarter of 2013, averaging 52.7. The index has averaged 55.2 since it was first compiled in July 1996. The outlook for the year was the darkest since December 2012, according to Markit. Companies said uncertainty linked to the EU referendum had weighed on workloads and incoming new business.
Recent data showed, that both manufacturing and services sector activities in the UK have been under pressure as Brexit-related uncertainty darkened the outlook for businesses. Accordingly, the BoE's Monetary Policy Committee is scheduled to meet on Thursday next week on July 14. Some market analysts are predicting a pre-emptive interest rate cut in order for the BoE to curb uncertainty and promote economic activity.
US Services PMI, US Trade Balance and FOMC Meeting Minutes
GBP/USD risks sustaining sharper losses
Due to BoE governor's statement on Tuesday the Sterling weakened substantially, breaching the 1.3230 support level and slumping down to the 1.30 major level. Even though technical indicators are giving mixed signals today, the Cable remains subject to more weakness. The weekly S2 at 1.2899 is the closest support today, but a much stronger cluster is located around 1.2660, represented by the weekly S3, the monthly S1 and the Bollinger band. However, we should not rule out the possibility of the Pound regaining the bullish momentum, amid a dovish Fed statement, which is scheduled for today.
Daily chart
Hourly chart
Bulls remain in control
There are 66% of all open positions being long today (previously 68%), while the number of orders to sell the Pound edged higher from 45 to 71%.
Compared to Monday, there are also slightly more bulls at OANDA - they take up 57% of the positions open with the Canada-based broker. Sentiment at Saxo Bank turned bullish, as here the number of bulls exceeds the number of bears by 10 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.40 in three months
More than half of traders (52%) believe the British currency is to cost 1.40 or more dollars after a three-month period. The most popular price intervals was selected by slightly less than a fifth (13%) of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost either between 1.36 and 1.38 dollars or between 1.40 and 1.42 dollars in three months, both chosen by 12% of the surveyed. At the same time, the mean forecast for Oct 06 is 1.40.