EURGBP gives up over 40 pips after the stronger than expected UK Services PMI. The final January 2020 UK Services PMI came in at 53.9 beating forecasts of 52.9. In the key points we can see that business activity rises for the first time in five months. Also there is a robust and accelerated increase in the new orders while growth expectations continue to improve in January. The latest reading was the highest for 16 months and above the earlier ‘flash’ estimate of 52.9 in January, to signal a robust increase in the service sector output
The GBP was under selling pressure after PM Boris Johnson introduced a hard stance in the negotiations with the EU after the Brexit. Boris Johnson repeated that the UK would not follow the EU’s rules and regulations after the departure.
The positive services PMI figure might enhance the Bank of England’s wait-and-see stance for longer period.
Read our Best Trading Ideas for 2020.
EURGBP failed today to break above the 50-day moving average while after the stronger UK services PMI the pair I under selling pressure. The technical outlook for EURGBP is bearish now as the pair failed to hold above the 50-day moving average.
Traders attention has shifted to lower levels. The immediate support for the EURGBP pair stands at 0.8433 the daily low. Next support level for the EURGBP would provide the low from February 3rd trading session at 0.8407. A convincing break below might open the way for a move down to 0.8359 the low from December 17th.
On the upside, initial resistance for the EURGBP will be met at 0.8482 the daily top. The next resistance level stands at 0.8535 the high from yesterday’s session. A move above that level will face the next resistance at 0.8595 the 100-day moving average.