Will UK services PMI put a bid under the GBP/USD pair?

• GBP/USD looks oversold according to the daily relative strength index (RSI).
• So, an above-forecast UK services PMI could yield corrective rally.
• But, sustained gains unlikely as a BOE rate hike in May is now a distant dream.

Having dropped more than 800 pips in the last two weeks, the GBP/USD looks oversold as per the 14-day RSI and could witness a corrective rally.

An above-forecast UK services PMI reading could set the corrective rally in motion. However, the odds of a BOE rate hike in May have pretty much evaporated in the last few days and a strong UK services PMI alone is unlikely to put the rate hike back on the table.

Hence, the corrective rally could run out of steam around the descending (bearish) short-term moving averages. The 5-day moving average (MA) and the 10-day MA are located at 1.3662 and 1.3807, respectively, and are trending south indicating bearish setup.

On the other hand, a below-forecast services PMI reading could send Pound crashing to fresh multi-month lows. UK April services PMI is due at 08:30 GMT and is expected to show the pace of expansion in the activity ticked higher to 53.5 index points from March reading of 51.7 index points.

GBP/USD Technical Levels

As of writing, the pair is mildy bid around 1.3594. A move above 1.3662 (5-day MA) could yield a rally to 1.37 (psychological hurdle) and 1.3712 (March 1 low). On the other hand, a break below 1.3570 (session low) would open up downside towards 1.3535 (200-day MA) and 1.35 (psychological level).