Technical Bias: Bullish
- British Pound spiked higher against the Swiss Franc despite miss in the UK Services PMI.
- UK PMI service released by both the Chartered Institute of Purchasing & Supply and the Markit Economics came in at 57.4, down from 58.5 in July 2015.
- GBPCHF is trading near a key resistance area, which might result in a short-term correction.
The GBPCHF pair gained heavily recently, as there was a lot of buying interest noted in the near term. There was a major bearish trend line on the hourly chart of the GBPCHF pair, which once cleared buyers were seen in control. The pair is now comfortably placed above the 100, 200 and 50 simple moving averages on the hourly chart, suggesting that sellers are struggling and more gains are likely.
There is a possibility that the pair might correct lower moving ahead, and if that is the case it might find support around the 23.6% Fib retracement level of the last wave from the 1.4936 low. The most important support is around 50 SMA, sitting around the 38.2% Fib level.
On the upside, the recent high of 1.5282 is a resistance area, and if there is a break above it more gains are likely towards 1.5300.
UK Services PMI
Today, the UK saw a critical release, as the PMI service, which is an indicator of the economic situation in the UK services sector was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The market was expecting it to decline from 58.5 to 58.0 in July 2015. However, the outcome was disappointing, as the UK Services PMI declined to 57.4.
Commenting on the report, the Chief Economist, Chris Williamson, mentioned that “A deterioration in service sector growth is the latest in a stream of signals that the economy has slowed as we move into the second half of the year”.
Buying dips closer to the 50 SMA is a good option.