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

The GBP/USD pair deflates from daily highs as we head towards the European open, shrugging-off solid bounce staged by the oil prices. The major pares gains and trades around 1.4515 levels as markets begin to price-in a disappointing UK services PMI print, which is due to be published at 8.30GMT today.

Cable could reverse course on weaker UK services print

The UK services PMI index improved in March to 53.7 points, close to the forecast. A slight slowdown is expected in the April report, with an estimate of 53.6 points.

A weaker PMI index is somewhat discounted by the markets as the upside in the GBP/USD pair remains capped near 1.4530 region. While the recent sluggish manufacturing and construction PMI readings also back the case for a slight deterioration in the UK’s services sector activity.

In case the reading comes out horribly weak, sterling could see a sharp decline weekly lows struck yesterday at 1.4462 levels. While a bullish surprise could provide fresh legs to the ongoing recovery in the cable beyond 1.45 handle.

GBP/USD Technical Levels

Haresh Menghani, Analyst at FXStreet explains, “The pair managed to rebound from 1.4480-70 support region (38.2% Fibonacci retracement level support of 1.4009-1.4770 up-swing) and hence, a follow through buying interest above 1.4530-35 horizontal resistance seems to assist the pair to move back towards 1.4590-1.4600 support turned resistance marked by 23.6% Fibonacci retracement level."

"On the flip side, weakness back below 1.4500 handle and a subsequent break below 1.4480-70 support now seems to provide the required momentum to drag the pair towards testing its next major support near 1.4385-80 confluence region, comprising of 20-day SMA and 50% Fibonacci retracement level.resistance, any further up-move now seems to be capped at the ascending trend-channel and 20-SMA support break-point, turned resistance near 1.4620-30 area.”