GBP/USD Falls to Support on Weak Services PMI

Britain’s services sector joins the manufacturing sector with a disappointing PMI: 53.8. Early expectations stood on a tick up to 54.4 points. GBP/USD is trading lower, with support working well.

The services sector is the most important one. When it fell below the 50 point mark a few months ago, this was bad fro the pound – a score of under 50 points reflects contraction. So, the sector is still growing, but at a slower pace.

GBP/USD now trades at around 1.6320, supported by 1.63. It’s important to note that the fall began before the official release time of 8:30 GMT. Was the figure leaked?

This is the third and last purchasing managers’ index for this week. The first one was very disappointing: The manufacturing sector in the UK has shown slower growth once again, with the figure falling to 52.1 points. Manufacturing sectors in China and in the US have disappointed as well.

The second PMI, for the construction sector, was somewhat encouraging: It unexpected ticked up to 54 points – not far from expectations, but a score higher than last month’s was greeted by the pound.

Before the release, GBP/USD was weakening within range: It dropped from around 1.6350 to 1.6320, above the 1.6280 to 1.63 region. 1.63 served as a cushion twice yesterday.

Further support appears only at 1.6110. Resistance is at 1.6430. For more on the pound, see the GBP/USD forecast.

Moves are rather limited as the tension mounts towards the all important Non-Farm Payrolls. Expectations were lowered earlier in the week, as the ADP report for the private sector was very disappointing, and also other US figures such manufacturing PMI and factory orders were weak.