02, May 2013

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

GBP/USD maintained its upward movement and has grown to just under 1.5550, while the cross-rate EUR/GBP struggling, trying to win back losses after an aggressive fall at the end of last week.

GBP/USD has reached the highest level in more than two months after the confidence index fell to minus 27 from minus 26 in the previous month. GBP gained 1.4% in value terms over the last month, rising to its highest level since February against the dollar and the euro, but this report is likely to reduce the recent optimism about the recovery of the UK economy. Growth of 0.3% in the first quarter of this year has reduced the likely prospects of further quantitative easing by the Bank of England, but traders will be looking for any excuse to reverse the recent trend.

PMI in the service sector will be released on Thursday and the numbers are weaker than expected. PMI will increase the concern about the prospects for the UK. In relative terms, the pound has gained some degree of protection to the U.S. data and trends in the euro area, although sterling could fall below 1.55.