GBPUSD Cheers Hat-trick of PMI Surveys Signaling UK GDP Rebound
GBPUSD Analysis and News
- UK Services Rises to Best Level Since December, BoE rate hike expectations lifted
- PMI Surveys Indicate UK Q2 GDP at 0.3-0.4%
UK PMIs Signal Rebound in UK Growth
GBP rose to its best levels of the day against the USD to 1.3378 from 1.3332 following the latest UK Services PMI report, which rose to its highest level since December at 54, beating expectations of 53. Subsequently, the combination of PMI surveys (Services, Manufacturing and Construction) which have all beaten forecasts signals that UK growth is to rebound in the second quarter, which aligns with the BoE’s narrative that weak first quarter growth is temporary. IHS Markit noted that GDP looks set to rise by 0.3-0.4% in the second quarter which is relatively in line with the Bank of England’s 0.4% forecast.
The better than expected Services PMI report led to a slight lift in BoE rate hike expectations, which now see odds of an August rate hike at 38% from previous of 34%. As such, this could see an unwind of some of the bearish sentiment in GBP, potentially setting up a move above 1.34 as markets increase pricing for an August rate rise.
GBPUSD PRICE CHART: DAILY TIME FRAME (Sep 2017-June 2018)
GBPUSD Technical levels
On the topside, the 20DMA is situated at 1.3390, before the psychological 1.34 handle, which is also the June 4th high. Elsewhere, the 23.6% Fibonacci Retracement of the 1.4377-1.3204 fall is at 1.3480. In terms of support, the June 1st low is at 1.3254, 1.3204-1.3200 also provides strong support for GBPUSD.
See how retail traders are positioning in GBPUSD as well as other major FX pairs on an intraday basis using the DailyFX speculative positioning data on the sentiment page.
For a more in-depth analysis on Sterling, check out the Q2 Forecast for GBP/USD
--- Written by Justin McQueen, Market Analyst
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