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Sterling Drops Following Soft Services PMI Report
Sterling continues to fall, with bearish undertones for the currency continuing to find a foothold following the unexpected services PMI decline. Cable had already fallen to a three-month low of 1.5256 ahead of the data release, and subsequently extended to a new nadir of 1.5237 shortly after the disappointing numbers hit the screens.
The services PMI unexpectedly dove to a 27-month low of 55.6 in the August survey from Markit, down from July’s 57.4. The median forecast had been for an uptick to 57.6. The composite PMI works out at 55.1, declining from last month’s 56.6. The data point to a slowing in growth momentum in the UK economy, adding impetus to the recent tapering in BoE tightening expectations.
Cable has posted a lower daily low in seven out of the last eight trading days. The pound has also lost 6% against the euro since its mid-July peak, which in part reflected the trimming of euro-funded positions as risk-off sentiment gripped global markets. Target support is seen near the June lows at 1.5162. Resistance is seen near the 10-day moving average at 1.5465. Momentum is negative with the MACD printing in negative territory with a downward sloping trajectory.
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