- GBP/USD trades lower on the back of downbeat UK PMI data.
- UK Composite PMI fell below 50 for the first time since January.
- Weaker PMIs from both economies flare the likelihood of rate hikes in September meetings.
GBP/USD extends its losses and trades lower around 1.2710 during the Asian session on Thursday. The pair faces downward pressure due to downbeat preliminary PMI data released from the United Kingdom (UK) on Wednesday, which came in below expectations. The preliminary S&P Global/CIPS Composite PMI (Aug) reported a decline of 47.9 from the previous reporting of 50.8, weaker than the expectation of 50.3. The index fell below 50 for the first time since January.
However, US PMIs also fell short of the market consensus, which helped the GBP/USD pair in trimming the losses from the previous day. Additionally, the US Treasury yields fell sharply on weaker US economic data, exerting downward pressure on the Greenback.
S&P Global Manufacturing PMI in August declined to 47, weaker than the market consensus of 49.3, from 49 prior. The S&P Global Services PMI for August dropped to 51 from the prior 52.3, falling short of the expected 52.2.
Weaker PMI data from both countries has signaled weaker economic activities, raising market expectations of less likelihood of interest rate hikes in September meetings by the central banks. This put the market participants into cautious status, seeking further cues on the economic outlook and inflation scenarios.
The US Dollar Index (DXY), which measures the performance of the buck against the six major currencies, hovers around 103.40 at the time of writing. Investors turn cautious ahead of the upcoming Jackson Hole annual symposium, where Fed Chair Jerome Powell will deliver a speech on Friday.
Traders will likely monitor Initial Jobless Claims from the United States (US) scheduled to be released later in the day. On the UK docket, GfK Consumer Confidence for August is due to be released on Friday. These datasets might offer valuable perspectives about the economic condition of both countries, providing fresh cues for GBP/USD traders.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD clings to recovery gains below 0.6550 on weaker USD, upbeat mood
AUD/USD holds sizeable gains below 0.6550 in the Asian session on Monday. A sharp pullback in the US bond yields prompts some US Dollar profit-taking after US President-elect Trump named Scott Bessent as Treasury Chief. Moreover, the upbeat market mood supports the risk-sensitive Aussie.
USD/JPY trims losses to regain 154.00 as USD sellers pause
USD/JPY trims losses to retest 154.00 in the Asian session on Monday. Retreating US Treasury bond yields drags the US Dollar away from a two-year top high and drives flows towards the lower-yielding Japanese Yen, though the BoJ uncertainty could limit losses for the pair.
Gold: Is the tide turning in favor of XAU/USD sellers?
After witnessing intense volatility in Monday's opening hour, Gold's price is licking its wounds near $2,700. The bright metal enjoyed good two-way trades before sellers returned to the game after five straight days.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.