More good news from the UK, but the pound is already stretched: UK services PMI rises to 58.7 points in April. The UK services purchasing managers’ index was expected to stay almost unchanged, rising slightly from 57.6 in March to 57.9 in April, reflecting very solid growth in Britain’s largest sector.
GBP/USD was on the rise towards the event, trading at 1.6930, basically at a new 4.5 year high. The pair struggles to extend its gains. — more coming —
Here is the gradual move higher:
While the move was front run, somewhat due to a weaker dollar, cable still finds room to extend the gains. The move would have probably been stronger without the early rise. At these levels, GBP/USD is less than 100 pips from the post crisis high.
The recent rise in the pound came on top of a downfall of the US dollar. Nevertheless, if we take one step back and look to last week, the pound has reasons to rise on its own: manufacturing PMI in the UK beat expectations and the construction PMI remained on high ground.
The unemployment rate stands at 6.9% and the economy is steaming forward.
At the high levels we are seeing now, the clear line is 1.70, a very round number. It is closely followed by 1.7042, the post crisis high.
On the downside we have 1.69 as immediate weak support, followed by 1.6840. For more, see the Pound dollar prediction.
