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.
UK Manufacturing and Industrial Productions, NIESR GDP Estimate and US ADP Non-Farm Payrolls
GBP/USD attempts to erase some previous losses
The Pound remained under pressure on Wednesday, having edged lower, with volatility stretching out to the 1.28 mark. Nevertheless, the immediate support level, namely the weekly S2 at 1.2899, was preserved, suggesting that the Sterling could undergo a small correction today. In case bulls take over the market, gains are expected to be limited by the 1.31 major level, also reinforced by the weekly S1. At the same time, a breach of the immediate support is likely to open the door for sharper losses, with the second support area located only around 1.2630, represented by the weekly S3, the monthly S1 and the Bollinger band.
Daily chart
Hourly chart
Bulls remain in control
Today 65% of traders hold long positions (previously 66%), while the portion of sell orders inched down from 71 to 65%.
Compared to Wednesday, there are slightly less bulls at OANDA - they take up 55% of the positions open with the Canada-based broker. Sentiment at Saxo Bank grew stronger, as here the number of bulls exceeds the number of bears by 16 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.40 in three months
More than half of traders (53%) believe the British currency is to cost 1.40 or less dollars after a three-month period. The most popular price intervals was selected by only 12% 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 11% of the surveyed. At the same time, the mean forecast for Oct 07 is 1.393.