The fact that the day for the pound will not be easy became clear immediately after the publication of data on the PMI of the services sector, which turned out to be lower than the forecast, 53.0 versus 54.1. Thus, this index complemented the negative picture of the decline in the three activity indices (construction sector, service sector and manufacturing sector) for the reporting month, and this is a significant negative signal in anticipation of the monetary policy decision that the Bank of England will make this week. The slowdown in the main sectors of the economy can discourage the regulator even about talking about a possible rate increase in the near future and about the next steps that the regulator can take.
The situation on the market worsened even more after the release of good statistical data from the USA. Here, on the contrary, the PMI of the non-manufacturing sector exceeded the forecast level of 56.5 points and stopped at 59.9. Those. unlike the UK in the USA, all recently published activity indices showed growth confirming good activity in the relevant sectors of the economy.
As a result, the pair finished the trading day with a decline of almost 200 points from the daily maximum and even today, it cannot move to a corrective growth, which is a very negative signal for investors. Obviously, the pressure on the currency pair persists and it can lead to an even greater decline. On the chart now, the price is below support at 1.3980 and if in the near future the bulls will not be able to return the price for this level again, we will surely see a continuation of the corrective bearish wave with a possible next target for a decline at 1.3660. Only in the case of returning the price for the level of 1.3980, it will be possible to count on the restoration of quotations.
Review prepared by Fort Financial Services analytical department. Follow our publications!