Global macro overview for 04/03/2016:
The PMI Services data from the UK was released yesterday and disappointed investors by printing a lower-than-expected number (52.7 vs. 55.1, 56.2 prior). Alongside the construction PMI released a couple of days ago (54.2 vs. 55.5, 55.0 prior), the business activity data for this sectors cooled sharply in February. Growth in both total business activity and new business was the weakest since March 2013, forcing firms to increase employment at the slowest pace in more than two years. In conclusion, we can easily observe concerns about the global economic slowdown, market turbulence, and the possibility of Brexit, which is the main theme in the UK now. This means a rate hike by the BoE is getting less and less possible with the data like this.
Let us now take a look at the GBP/USD pair after the news release. The pair managed to bounce back into the golden channel, but it was capped at 61% Fibo at the level of 1.4188. The weekend gap between the levels of 1.4304 - 14341 still has not been filled yet, but in case of any bullish rally continuation, this level will be the first target for bulls. On the other hand, a violation of the level of 1.4043 will put the bears back in control and the downtrend will accelerate towards the level of 1.3836.