The pull back in the GBP/USD from the recent high of 1.3031 appears to have come to halt around 1.2926 (23.6% Fib R of 1.2589-1.3031). What may helped the spot as well is the golden cross – bullish crossover between the 50-MA and 200-MA on the 4-hour chart.
Eyes UK Services PMI
UK June services PMI due at 08:30 GMT is expected to show that the pace of expansion in the activity cooled slightly to 53.5 from May’s 53.8. A slowdown in the manufacturing and construction sector as highlighted by the PMIs released earlier this week suggests the demand for the services may have weakened as well.
Weaker services PMI would increase concerns that Britain’s economy could slow in the second half of 2017. Thus, the odds of a BoE rate hike would drop, pushing the GBP/USD pair lower towards the upward sloping 4-hour 50-MA currently seen at 1.2871.
On the other hand, a strong services PMI print would mean higher odds of an early BoE rate hike and shall add credence to the golden cross on the 4-hour chart. The spot could then revisit the recent high of 1.3031.
GBP/USD Technical Levels
The spot traded around 1.2940 in Asia. A break below 1.2913 (previous day’s low) would expose 1.2871 (4-hour 50-MA) and 1.2844 (4-hour 200-MA). On the higher side, breach of resistance at 1.2946 (June 30 low) would shift risk in favor of a revisit to 1.3031 (recent high) and 1.3048 (May 18 high).