Key Points
- British Pound continued to trade down against the US Dollar, and traded close to the 1.3100 level.
- The GBPUSD pair broke a major support area at 1.3230-20, which may now act as a resistance.
- In the UK, the PMI service was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics.
- The result was disappointing, as there was a decline from the last reading of 53.5 to 52.3 in June 2016.
Technical Analysis
The British Pound collapsed against the US Dollar, and traded below an important support area of 1.3230-20. The GBPUSD pair is also below the 100 and 50 hourly simple moving average, which is a negative sign.
If the pair corrects higher, then the highlighted resistance area along with the 50% Fib level of the last drop from the 1.3338 high to 1.3111 low may come into play.
On the downside, the recent low of 1.3111 may be considered as a support area.
UK Services PMI
In the UK today, the PMI service, which is an indicator of the economic situation in the UK services sector was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The market was expecting a decline from 53.5 to 52.7 in June 2016, but it came in at 52.3.
The report added that “Growth over the second quarter as a whole was the weakest since the first quarter of 2013 when the current upturn began. Moreover, the 12-month outlook was the darkest since December 2012. Companies often reported that uncertainty linked to the EU referendum had weighed on workloads and incoming new business“.
Overall, there is nothing going right for the GBPUSD pair, and it may continue to weaken in the short term.
