Breaking: UK Preliminary Manufacturing PMI jumps to 40.6 in May vs. 36.0 expected, GBP/USD above 1.2200

The UK manufacturing and services sector activities showed a slowdown in the pace of contraction in May, the preliminary report from IHS Markit showed this Thursday. 

The seasonally adjusted IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) jumped to a two-month high of 40.6 in May versus 36.0 expected and 32.6 – April’s final reading.

Meanwhile, the Flash UK Services Business Activity Index for May also hit two-month highs at 27.8 versus April’s final readout of 13.4 and 25.0 expected.

Chris Williamson, Chief Business Economist at IHS Markit, commented on the survey

“The UK economy remains firmly locked in an unprecedented downturn, with business activity and employment continuing to slump at alarming rates in May. Although the pace of decline has eased since April’s record collapse, May saw the second-largest monthly falls in output and jobs seen over the survey’s 22-year history, the rates of decline continuing to far exceed anything seen previously.”

"Travel and tourism firms, hotels, restaurants and producers of consumer goods such as clothing were again the hardest hit, reflecting virus containment measures, but this remains a shockingly broad-based downturn with very few companies left unscathed by the COVID-19 pandemic.”

FX implications

The above forecasts UK Preliminary Manufacturing and Services PMI put a fresh bid under the GBP, as GBP/USD jumped to fresh session highs of 1.2218.

GBP/USD technical level to watch