UK services PMI preview: What to expect of GBP/USD?

The UK economy will release its June services PMI later in the European session at 0830GMT, which is forecast to tick lower from 53.5 to 53.1. 

The business activity in the UK’s services sector is expected to edge lower in June, after having positively surprised markets in May. Markets had predicted services PMI at 52.5 point in May.  

The services sector report is likely to consider the impact of UK’s exit from EU’s membership on the overall business sentiment, which had improved to the highest in ten months in May. While new business growth and job creation will slow further and hover around multi-month troughs.

On a weaker PMI print, we could see GBP/USD falling back towards post-Brexit lows reached at 1.3118, while a better show could rescue the cable from the selling spiral and drive the rate back towards 1.3250 levels.

However, limited reaction is expected on the data release as the main market driver for the GBP today is expected to be the BOE Financial Stability Report (FSR) and BOE Governor Carney’s speech.

GBP/USD Technical Levels:

Haresh Menghani, Analyst at FXStreet notes, “A convincing break below 1.3200 handle support, the pair seems to immediate drop to test Brexit-led swing lows support around 1.3120 before heading towards breaking 1.3000 important psychological mark support and aim towards testing support around 1.2850 region marking 100% Fibonacci expansion level.”

“Meanwhile on the upside, momentum above 1.3300 round figure mark is likely to get extended but might continue to confront immediate strong resistance near 1.3350 horizontal area.”