Investors who were looking for a quick opportunity to attack the pound were given the green light on Thursday after Britain’s service sector rebounded less than expected last month.
The UK Services PMI rose to 52.8 in April, up from March’s score of 51.7 but below the 53.5 market forecast. The sluggish services data is likely to weigh on sentiment and fuel concerns over economic growth remaining subdued. Expectations over the Bank of England raising interest rates next week have deteriorated further following today’s disappointing PMI report with the GBP/USD dipping towards 1.3573 at time of writing. Sterling could be poised for further pain as the combination of Brexit uncertainty and fading UK rate hike expectations expose the currency to downside risks. The increasing divergence in monetary policy between the BoE and Fed could instill bears with enough inspiration to send the GBP/USD to levels not seen since December 2017 - around 1.3400.
From a technical standpoint, the GBP/USD remains heavily bearish on the daily charts. There have been consistently lower lows and lower highs while the MACD has crossed to the downside. The breakdown below 1.3640 could encourage a decline towards 1.3580 and 1.3500, respectively.
Commodity spotlight – WTI Oil
Oil prices edged higher on Thursday as investors overlooked the surging U.S crude inventories, but focused on OPEC supply cuts and developments around the Iran nuclear deal.
Price action continues to suggest that WTI bulls remain heavily reliant on geopolitical tensions and fears of supply shortages to sustain the current upside. While oil could appreciate further if the U.S withdraws from the 2015 Iran nuclear deal, gains are likely to remain limited by robust production from U.S. Shale. Oil remains shaky and an appreciating dollar has the ability to accelerate the downside. From a technical standpoint, WTI bulls are displaying early signs of exhaustion on the daily charts with resistance found at $69.00 per barrel. A failure for bulls to keep above the $67.50 level could result in a decline towards $67.00 and $66.00, respectively.