Sterling has been sent into a tailspin of bearish fundamental headline of late, from data misses to political concerns that have weighed on sentiment in the pound and economic recovery in general. The pair slid to new lows earlier on the back of April’s sub-consensus UK service PMI that arrived at 52.8 vs 53.5 expected, adding to the series of data disappointments of late. At the same time, news that the UK PM, Theresa May, is having issues with her inner Cabinet on how to deal with future trade relations with the EU, sent the GBP/USD to a fresh 4-month low.
GBPUSD Moves Lower
While UK saw some fresh breathing space during Wednesday’s session post positive constructions PMI, lost the only trigger to help push it back on Bull Run post disappointing Service PMI data and is expected to close bearish for the week. Analysts believe that there will be no move in policy rates this month but expect the Bank to continue to point to the need for gradual and limited policy tightening on the assumption of a recovery in the data.
When observing the GBP/USD pair on technical front, the pair created a doji candle yesterday, signaling the bears are having a breather ahead of the US April payrolls and wage growth release. This doji candle has been created near the 200-day moving average support. Traders are expecting a convincing move below the key moving average before hitting the market with fresh offers. The pair is expected to move on range bound pattern ahead of US payroll data to be released later today. However the bear’s grip on GBP currently remains so strong that even a dovish payroll data would have very less impact as brexit woes continue to grow larger by the day and traders await local election to gauge public sentiment. Expected support and resistance price range for the pair are at 1.3540 / 1.3500 / 1.3465 and 1.3610 / 1.3645 / 1.3690 respectively.