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GBP/USD Forecast: Hammer Forms Ahead of UK Services PMI

The GBP/USD is crawling back ahead of the important UK services PMI numbers. The GBPUSD is trading at 1.3663, which is slightly above the overnight low of 1.3611.

GBP/USD news: The biggest catalyst on the pound sterling price will be the UK services PMI numbers that will come out at 09:30 GMT. Expectations are low among economists because of the lockdowns that happened in January. Most of the country and non-essential businesses were closed during the month to slow the spread of the virus. 

Therefore, economists expect the data to show that the services PMI dropped to 38.8 in January. This will be the lowest reading since April last year. This PMI is watched closely because the UK is mostly a service economy, with the sector employing millions of people. The composite PMI, which also includes the manufacturing sector is expected to drop to 40.6.

The GBP/USD will also react to the ADP employment numbers that will come out in the afternoon session. The data will come ahead of the important US jobless claims numbers and the nonfarm payroll data.

GBP/USD technical outlook

The four-hour chart shows that the GBP/USD price formed a hammer pattern earlier today. The price then rose to an intraday high of 1.3682, which is along the ascending trendline that connects the lowest levels on 11th, 18th, 26th, and 28th, respectively. The price is also inside the Ichimoku cloud. 

Therefore, in my view, the GBP/USD is still in a bearish trend. This will be confirmed if it moves below the overnight low of 1.3610. If it retests this level, it will open the possibility of it dropping to 1.3550. This prediction will be invalidated if it moves above the ascending trendline.

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GBPUSD technical chart

GBP/USD

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