GBP/USD calm, markets keep eye on Powell speech

[PocketOption]

GBP/USD calm, markets keep eye on Powell speech

The British pound is showing limited movement on Tuesday. GBP/USD is trading at 1.2681 early in the North American session, up 0.25% on the day.

There are no UK events today, while the US releases Jolts Job Openings and Federal Reserve Chair Powell speaks at the ECB forum in Sintra, Portugal.

UK PMIs points to weak economy

The Purchasing Managers' Indices (PMIs) provide a snapshot of the health of key industries and the UK picture is not a pretty one. The manufacturing sector is just emerging from a prolonged decline of almost two years. The Manufacturing PMI has crawled into expansion territory by a whisker and today's the June reading of 50.9 points to stagnation. This was lower than the May reading of 51.2 and shy of the market estimate of 51.4. The 50.0 level separates expansion from contraction.

The services sector, which has carried the UK economy is in growth mode but is slowing down. The Services PMI which will be released on Wednesday, dropped from 55.0 to 55.2 in May and is expected to ease to 51.2 for June. Business confidence remains weak and there is heightened uncertainty ahead of the UK election on July 4.

Construction has surprised on the upside and has accelerated for three straight months. The Construction PMI rose to 54.7 in May, above expectations and its highest level since May 2022. The June report will be released on Thursday and is expected to ease to 53.6.

Federal Reserve Chair Powell will deliver remarks at the ECB forum later today and investors will be looking for clues about the Fed's rate path. Expectations of a September rate cut have been steady over the past week at around 60%, according to the CME's FedWatch. Any hints about a rate cut could shake up GBP/USD.

GBP/USD Technical

•   GBP/USD is testing resistance at 1.2661. Above, there is resistance at 1.2690


•  1.2622 and 1.2593 are the next support levels

Source: GBP/USD calm, markets keep eye on Powell speech