GBP/USD hits a daily low below 1.2000 post US ISM Manufacturing PMI

• GBP/USD turned negative after the release of the US ISM Manufacturing PMI.
• Fed’s Kashkari said he’s open to raising 25 or 50 bps.
• BoE Bailey commented that the BoE is not done hiking rates.

GBP/USD is sliding, even though the market sentiment is upbeat on positive data from China. In addition, a Bank of England (BoE) official was more hawkish than expected, sponsoring a leg-up in the GBP/USD. At the time of writing, the GBP/USD exchanges hands at 1.2005, below its opening price by 0.15%.

GBP/USD shifted negative, despite hawkish BoE’s Bailey comments

Sentiment turned mixed in the session. Data from China revealed that manufacturing activity in the second-largest economy entered the expansionary territory, a tailwind for riskier assets. That boosted global equities with the Dow Jones trading in the green while the S&P 500 and the Nasdaq fluctuated.  At the same time it weakened the US Dollar, pushing down the Cable. 

The GBP/USD has retreated some of its earlier gains due to Fed officials speaking, namely the Minnesota Fed President Neil Kashkari (voter). Kashkari said that in December, he thought that rates needed to go to 5.4% and hold, and added that he’s open at the next Fed meeting to increase rates 50 or 25 bps. He said that the risks of untightening are much more significant than overtightening.

The US ISM Manufacturing PMI came at 47.7, below 48.0 estimates, which sponsored a leg toward the daily low at 1.1964.

Also read: Breaking: ISM Manufacturing PMI edges higher to 47.7 in February vs. 48 expected

Although Kashakri’s comments weighed in the GBP/USD, an earlier BoE Governor Andrew Bailey’s speech capped the GBP/USD's fall. BoE governor Bailey commented that the Bank is not done with hiking rates and emphasized that BoE will inevitably need to do more. He added that further increases in the Bank Rate might be appropriate. Added that if the BoE falls short on rates, it will only have to do more later on.

On Brexit news, the Senior Democratic Unionist Party official, Charles Whip Wilson, said that the party is studying the new Northern Ireland trade deal’s details and would not make a knee-jerk decision on whether to accept it. Wilson said that was “an indication that the government knew this deal was not great and was trying to persuade unionists to accept it on the basis that we have great respect for the monarchy.”

Of late, the S&P Global Manufacturing PMIs for the US came in at 47.3 vs. a previous reading of 47.9, and at around 15:00 GMT, the release of the ISM Manufacturing PMI would shed some light on the status of the US economy.

GBP/USD Key technical levels