To Remain in a Narrow Range

The GBP/USD pair moved sideways after the latest US and UK services and composite PMI numbers. 

• Set a sell-stop at 1.2365 and a take-profit at 1.2300.
• Add a take-profit at 1.2500.
• Timeline: 1-2 days.

• Set a buy-stop at 1.2465 and a take-profit at 1.2542.
• Add a stop-loss at 1.2360.

The GBP/USD pair remained in a tight range amid a light economic calendar and news week. The pair was trading at 1.2438, a few percentage points below last week’s high of 1.2547. With the economic calendar being light on Tuesday, the pair will likely remain in this consolidation in the near term.

The GBP/USD pair moved sideways after the latest US and UK services and composite PMI numbers. According to S&P Global, the services PMI came in at 55.2 in May, lower than April’s 55.9 but better than the median estimate of 55.1. As a result, the composite PMI dropped slightly to 54.0 in May.

These numbers mean that the country’s services sector is doing well even as service providers lament about the rising cost of doing business. They also show that the services sector is recovering at a faster pace compared to the manufacturing sector.

Data published last week showed that the manufacturing PMI figure remained below 50. And the situation could worsen as automakers warn about the lack of regulations clarity in the UK. Some analysts believe that the remaining automakers will likely start moving out of the country.

Meanwhile, data published from the US were relatively weak. The services PMI figure came in at 54.9 in May, lower than the expected 55.1. The composite PMI of 54.5 was also lower than the expected 54.5. Still, these numbers also show that the services sector is doing better than the manufacturing one.

There will be no major economic data on Monday. Therefore, traders will continue assessing the likely outcome of this month’s meeting by the Federal Reserve and the Bank of England. While it’s still early, expectations are that the Fed will leave rates unchanged while the BoE will hike by 25 basis points.

The GBP/USD pair pared back some of the losses made on Friday. On the 4H chart, the pair is between the first and second support of the Andrews pitchfork tool. It also moved below the 23.6% Fibonacci Retracement level and the 23.6% Retracement point.

The MACD and the signal lines have made a bearish crossover while the histogram has dropped below the neutral point. Therefore, the pair will likely remain in this range on Tuesday and then have a bearish breakout later this week.

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