Sterling (GBP) Remains Weak on Brexit, UK Services PMI Beats
Sterling Price, News and Analysis
- Sellers in charge on negative Brexit sentiment.
- Services PMI rebounds after last-month’s weak reading.
GBPUSD Needs to Hold Near-Term Support
GBPUSD continues to drift lower and back towards important short-term support despite a better-than-expected CIPS UK Services PMI report which beat market expectations – 54.3 (actual) vs 53.9 (expectations) and 53.5 (prior). Today’s PMI release points to UK growth in the region of 0.4% to 0.5% in Q3, at least in-line with the 0.4% growth seen in the second quarter.
Duncan Brock, group director at CIPS said that while today’s release pointed to a steady level of activity, “the dark clouds of political indecision are still having an effect and preventing more business activity. Service providers are likely to continue along this vein for the rest of the year until those clouds have cleared.”
A strong US dollar continues to play its part in moving the pair lower, while recent Brexit talk has soured last week’s positivity. The PM’s Chequers plan is now looking dead in the water with ex-UK Brexit negotiator and EU negotiator Michel Barnier now openly speaking about a ‘Canada +’ style agreement or WTO rules.
GBPUSD Daily Price Chart (February 2017 – September 5, 2018)
The daily GBPUSD chart above shows that the recent triple-lows either side of 1.2800 need to hold to prevent further negative momentum and a re-test of the August 15 low at 1.2662. GBPUSD currently trades below all three moving averages and shows a negative pattern of six lower high/lower low candles in a row.
--- Written by Nick Cawley, Analyst
To contact Nick, email him at firstname.lastname@example.org
Follow Nick on Twitter @nickcawley1
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.