“¢ UK services PMI fall short of market expectations and prompt some selling.
“¢ Downside remains cushioned amid a subdued USD demand/Brexit optimism.
“¢ Traders now eye US ISM non-manufacturing PMI for some meaningful impetus.
Having touched a session high level of 1.3025, the GBP/USD pair met with some fresh supply and refreshed daily lows post-UK services PMI, filling the weekly bullish gap.
The pair opened with a bullish gap on the back of positive Brexit news over the weekend, stating that the UK PM Theresa May has planned an all-UK customs deal with the EU to avoid a hard border in Ireland. The up-move, however, turned out to be short-lived after the UK PM May’s spokesman dismissed the report as speculative.
The pair continued with its struggle to sustain early up-move beyond the key 1.30 psychological mark and was further weighed down by today’s yet another disappointing UK services PMI print, coming in at 52.2 for October as compared to 53.3 anticipated and worse than previous month’s reading of 53.9.
Meanwhile, the latest comments by the UK Finance Ministry Official John Glen, saying that he is extremely confident on reaching a Brexit deal on financial services imminently, did little to provide any meaningful lift to the British Pound amid concerns over the key sticking point on the Irish border.
The downside, however, seemed cushioned, at least for the time being, and was supported by a subdued US Dollar price action. Moving ahead, today’s release of the US ISM non-manufacturing PMI might influence the USD price dynamics and provide some short-term trading impetus.
Technical levels to watch
The 1.2965-60 region now seems to have emerged as an immediate support, below which the pair is likely to extend the fall further towards challenging the 1.2900 handle. On the upside, any meaningful up-move is likely to confront fresh supply near the 1.3040 region (100-day SMA), which if cleared might trigger a short-covering rally and lift the pair further towards reclaiming the 1.3100 handle.
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