GBP/USD Trading Heavy As UK Services PMI Disappoints
Nathan Kay | Jun 04, 2015 03:26PM ET
The British pound managed to climb higher this week against the US dollar, and enjoyed good gains. However, there was a strong reaction noted around the 1.5380-1.5400 resistance area. The 200 simple moving average on the 4-hours chart stalled the upside in the GBP/USD pair and pushed it back lower. The economic releases in the UK were also not on the positive side. The latest example was the UK Services PMI, which failed to match with the forecast.
UK Services PMI
Earlier during the London session, the UK Services PMI, which is an indicator of the economic situation in the UK services sector released by the Chartered Institute of Purchasing & Supply and Markit Economics (NASDAQ:MRKT), was released. The market was expecting it to decline from the last reading of 59.5 to 59.2 in May 2015. However, the outcome was way below the forecast, as the UK Services PMI declined to 56.5. The report stated that rates of growth in both total business activity and new work was one of the slowest in 2015 so far.
There were some important things to note, such as the Business Activity Index, which signaled growth of services output, registering a reading of 56.5, which is the twenty-ninth successive month rise in May. Moreover, the input prices rose at the fastest pace in eight months, which was quite surprising.
Commenting on the report, the Chief Economist at Markit, Chris Williamson, stated that “recent weakness in manufacturing and construction has spread to services. Overall growth in May across all three sectors was the lowest since December and the second-weakest for two years.”
Overall, the data was not exciting and increased bearish pressure on the British pound. There was a sharp downside reaction noted after the release in GBP/USD.
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