According to the purchasing managers’ index (PMI), the services sector contracted – the score is under the critical 50 point mark separating contraction and economic expansion. Early expectations stood on a score of 52.9 points, very close to last month’s 53 points – both on the growth side. The score of 49.7 is therefore a big disappointment.
This joins a similar disappointment in the construction sector, which also saw contraction. Only the manufacturing sector is growing, and a good speed – manufacturing PMI exceeded expectations and scored 58 points earlier in the week.
The pound took a dive this time – it fell sharply from 1.5550 to 1.5475, still above the low levels seen yesterday. It’s still above the minor support line of 1.5470. Much more important support appears at 1.5350. Significant resistance is at 1.5650.
For more levels and events, see the British pound forecast.
The weakness in cable also comes from strong US figures released in recent days – the ADP jobs report was no less than outstanding, and both manufacturing and services PMIs in the US were excellent. Even factory orders surprised.
We still have the weekly unemployment claims later today, and of course, the king of forex trading – Non-Farm Payrolls to close the week. See the NFP preview for details about this big event.Get the 5 most predictable currency pairs