The GB Pound bounced up from a low of 1.5875 yesterday to consolidate above 1.6000 against the US Dollar. This rise resulted from the European Central Bank’s surprise decision to cut interest rates, which supported riskier assets. Although the pound has advanced it is still below the 200-day MA, currently at 1.6140, which maintains the near-term bias negative.
The latest PMI services-sector report showed a decline from September’s 52.9 to 51.3 in October. Although economists had predicted a decline to around 52.0, the lower figure of 51.3 was unexpected and increases concern that the economy is weakening in Q4 and could fall into contraction.
The report showed a modest improvement in business confidence, but contained an overarching impression of caution. Markets remained tentative regarding the UK economic outlook and the Monetary Policy Committee will meet next week with the possibility of quantitative easing from the Bank of England, which could in turn weaken the GB Pound.
The US non-farm payrolls were announced today at 12:30, they document the number of people on the payroll of all non-agricultural businesses. The figures showed a rise in jobs by 80,000, and although the unemployment rate dropped from 9.1% to 9.0%, the results were 15,000 less than the 95,000 expected by analysts. These statistics caused the GB Pound to fall back down below 1.6000 to around 1.5960. The pair is likely to find support at 1.5877, Thursday’s low, and resistance at 1.6166, Monday’s high.
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