The UK services sector expanded for the first time in around half a year according to today's data, as the February preliminary services PMI came in at 53.3. This raises chances for further tightening by the Bank of England, which had softened its language earlier in the month. However, communication is vague and divisions amongst policymakers create an uncertain environment.
GBP/USD jumped after the PMI beat and reclaims 1.2100, which brings 1.2271 in the spotlight. However, it will likely need fresh new catalyst for taking it out and we are cautious around further advance towards 1.2447-53.
The pair's trajectory will rely on incoming data from the United States over the coming days and Wednesday's accounts of the Fed's last policy meeting. The blockbuster jobs report at the start of the month heightened expectations around the bank's policy path, which were solidified by last week's higher than expected inflation figures and hawkish comments by officials.
CME's FedWatch Tool now assigns the highest probability to rates peaking at 5.5%, suggesting another 75 basis points worth of hikes . The repricing supports the greenback and GBP/USD is in risk of renewed pressure towards 1.1840, but further weakness that would challenge 1.1652 has a higher degree of difficulty.
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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