Global macro analysis for 05/09/2017:
The UK Services PMI dipped to the 11-month low. According to the recent data from Markit, the UK Services PMI declined from 53.8 points to 53.3 points in the reported month. The reading was slightly below the expected figure of 53.5 and the lowest print since September 2016.
Despite the fact that UK service providers recorded solid rises in business activity and incoming new work during August, the pace of growth eased since July and remained notably weaker than seen on average in the first half of 2017. Moreover, the costs pressures across the service sector are rising: the costs of fuel, staff, and imported goods contributed to another solid increase in average prices charged by service providers in August. The increase in cost pressures will maintain concerns that underlying inflation will increase that eventually will make it more difficult to bring the inflation back to the Bank of England yearly target.
Overall business expectations strengthened to a 3-month high, although sentiment was still relatively subdued. There were further concerns surrounding both economic and political uncertainties and the fresh data are pointing out that the UK economy is slowly losing the momentum. This conclusion will directly impact the British Pound by depreciating the currency across the board.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. The bulls have managed to bounce from the golden trend line support around the level of 1.2900, but the lack of upside momentum and neutral market conditions still make the GBP vulnerable to fall. The next technical support is seen at the level of 1.2861.
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