The British pound is down considerably in Thursday trade. The pair is currently trading at 1.4101, down 0.47% on the day.
British service sector surges
The UK service sector continues to impress, as business activity showed its strongest rise in 24 years. Services PMI rose to 62.9 in May, up from 60.7 and above the preliminary reading of 62.0. This was a fourth straight gain for the PMI.
The promising data comes on the heels of an OECD forecast of UK growth, which was upwardly revised 7.3%. At the same time, it should be remembered that the economy contracted by close to 10% in 2020, when Covid-19 caused a severe downturn in economic conditions.
The US dollar is broadly higher on Thursday, and has pushed the pound to the 1.41 level. Although the Fed insists it is committed to an ultra-accommodative policy, there are investors who are concerned that the strong economic recovery and rising inflation could see the Fed tighten policy sooner rather than later. There are some Fed members who have urged the Fed to start a debate over tapering, most recently Fed member Patrick Harker.
The market will be glued to US nonfarm payrolls for May, which will be released on Friday (12:30 GMT). Earlier today, the ADP Employment report came in at 978 thousand, crushing the estimate of 645 thousand. This was an outstanding release, but the ADP data cannot be considered a reliable indicator of how the official NFP report will perform. In addition, the most recent NFP report was a huge miss, as the reading of 266 thousand was nowhere near the consensus of 990 thousand. The NFP forecasts have been widely off the mark for most of 2021, so investors are proceeding with caution, despite the rosy estimate of close to one million new jobs.
GBP/USD Technical Analysis
- GBP/USD is facing resistance at 1.4241. Above, there is resistance at 1.4293
- On the downside, there are support lines at 1.4114 and 1.4039
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
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