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Pound rally continues despite decline in UK PMIs

Started by PocketOption, Sep 25, 2024, 06:07 am

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PocketOption

Pound rally continues despite decline in UK PMIs

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The British pound continues to gain ground. GBP/USD has climbed 2.6% since Sept. 12 and is at its highest level since March 2022. In the North American session, GBP/USD is trading at 1.3393, up 0.35% on the day.


UK PMIs decelerate in September


UK services and manufacturing PMIs softened in September but the data didn't sour the mood of investors and the pound has moved higher today.


The manufacturing PMI eased to 51.5, down from 52.5 in August which was also the market estimate. The services PMI dropped to 52.8, below the August reading of 53.7 and the market estimate of 53.5. The silver lining is that both manufacturing and services remain in expansion territory - services have expanded for 11 straight months, while manufacturing for five consecutive months. The 50 line separates contraction from expansion.


Manufacturing and services firms both noted concern over next month's Autumn Budget. The new Starmer government has signaled that it plans to raise taxes, which has complicated hiring and investment plans.


The Bank of England holds its next meeting on November 7, just one week after the Autumn Budget. The UK economy showing signs of improvement and inflation has dropped to 2.2%, within striking distance of the BoE's 2% target. The BoE is under pressure to deliver a rate cut after staying on the sidelines last week.


The drama over the Federal Reserve's first rate cut in over four years is finally behind us. The markets have digested the jumbo 50-basis point cut and will be looking for guidance from a host of Fed officials who will make public appearances this week. The move will increase the likelihood of a soft landing but concerns remain about the labor market which has weakened dramatically and triggered a global market meltdown in early August.


GBP/USD Technical



  • GBP/USD is testing resistance at 1.3389. Above, there is resistance at 1.3429

  • 1.3318 and 1.3278 are providing support



 


 


 


Source: Pound rally continues despite decline in UK PMIs