The GBPUSD trades with a bid tone after the UK service sector continues to expand. Earlier today the UK PMI Services showed the third successive month of growth, fueling another attempt from the GBPUSD at the 1.30 level.
Speaking of the 1.30 level, the pair bounced after a bullish divergence with the RSI formed on the 4h chart. Despite last Friday’s NFP data in the United States showing a declining unemployment rate, cable continued to trade with a bullish tone.
Strong Performance From the UK Services Sector
After the sharp downturn created by the coronavirus crisis, the UK services sector bounced strongly, albeit showing an uneven recovery. The positive for the UK services sector is that it continues to expand for the third consecutive month. However, a close look at the employment component reveals that employee numbers in the sector continue to fall.
Nevertheless, the Final Services PMI on 56.1 shows a sector that expands strongly. If we consider the fact that the UK economy is a service-based one, then the release will have an impact on the upcoming UK GDP data.
Brexit and the US elections are likely to result in extended consolidation periods for most USD pairs. Therefore, any trade should consider tighter stops and take-profit levels and lower volume due to the market’s inactivity.
GBPUSD Technical Analysis
The technical picture on the GBPUSD pair reveals what all the USD pairs show – hesitation and uncertainty ahead of the US elections. Moreover, the consolidation area close to the 1.30 level continues.
For the cable pair, the 1.30 looks like the pivotal level to watch. On a move higher, it offers a great risk-reward ratio for a bearish trade against dynamic resistance. Bears would want to trade on the short side by the time the price reaches 1.30, targeting 1.26 with a stop-loss at 1.3160.
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GBPUSD Price Forecast
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