GBP/USD: fundamental background
By Kira Iukhtenko, FBS
On Wednesday the British pound found support at the $1.6700 mark as the business activity in the UK service sector increased markedly during May. Services PMI came at 58.6 versus forecasted 58.3. Manufacturing and construction indices earlier in the week also came far above the key 50.00 mark.
Despite the positive data flow, sterling remains under harsh bearish pressure. One may see from the daily chart that the pair slipped below the 55-day MA and keeps on testing the lower border of the September 2013 channel. MACD histogram is giving out bearish signals. Key resistance now lies at $1.6780, while support is seen at $1.6700/6690.
The Bank of England begins a 2-day policy meeting today. Strong economic data raises expectations of a premature rate hike in UK, but the June meeting is not expected to bring any surprises – the BoE Monetary Policy Committee is far from reaching a compromise on a rate issue.
As for the USD side, watch the ADP nonfarm payrolls release today at 12:15 GMT.
Chart. Daily GBP/USD