Pound soft­ens on PMI dis­ap­point­ment, Oil shaky

Financial Mirror (Cyprus) - - FRONT PAGE -

In­vestors who were look­ing for a quick op­por­tu­nity to at­tack the Pound were given the green light on Thurs­day af­ter Bri­tain’s ser­vice sec­tor re­bounded less than ex­pected last month.

The UK Ser­vices PMI rose to 52.8 in April, up from March’s score of 51.7 but be­low the 53.5 mar­ket fore­cast. The slug­gish ser­vices data is likely to weigh on sen­ti­ment and fuel con­cerns over eco­nomic growth re­main­ing sub­dued. Ex­pec­ta­tions over the Bank of Eng­land rais­ing in­ter­est rates next week have de­te­ri­o­rated fur­ther fol­low­ing to­day’s dis­ap­point­ing PMI re­port with the GBPUSD dip­ping to­wards 1.3573 at time of writ­ing. Ster­ling could be poised for fur­ther pain as the com­bi­na­tion of Brexit un­cer­tainty and fad­ing UK rate hike ex­pec­ta­tions ex­pose the cur­rency to down­side risks. The in­creas­ing di­ver­gence in mone­tary pol­icy be­tween the BoE and Fed could in­stil bears with enough in­spi­ra­tion to send the GBPUSD to lev­els not seen since De­cem­ber 2017 - around 1.3400.

From a tech­ni­cal stand­point, the GBPUSD re­mains heav­ily bear­ish on the daily charts. There have been con­sis­tently lower lows and lower highs while the MACD has crossed to the down­side. The break­down be­low 1.3640 could en­cour­age a de­cline to­wards 1.3580 and 1.3500, re­spec­tively. on OPEC sup­ply cuts and de­vel­op­ments around the Iran nu­clear deal.

Price ac­tion con­tin­ues to sug­gest that WTI bulls re­main heav­ily re­liant on geopo­lit­i­cal ten­sions and fears of sup­ply short­ages to sus­tain the cur­rent up­side. While oil could ap­pre­ci­ate fur­ther if the U.S with­draws from the 2015 Iran nu­clear deal, gains are likely to re­main lim­ited by ro­bust pro­duc­tion from U.S Shale. Oil re­mains shaky and an ap­pre­ci­at­ing Dol­lar has the abil­ity to ac­cel­er­ate the down­side. From a tech­ni­cal stand­point, WTI bulls are dis­play­ing early signs of ex­haus­tion on the daily charts with re­sis­tance found at $69.00. A fail­ure for bulls to keep above the $67.50 level could re­sult in a de­cline to­wards $67.00 and $66.00, re­spec­tively.

Mar­kets Re­port b

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