GBP/USD falls to near 1.3400 following mixed UK PMI data

GBP/USD stays close to 1.3468, the highest since February 2022, reached on Wednesday,
UK Manufacturing PMI fell to 45.1 in May, meanwhile, Services PMI rose to 50.2.
The US House Rules Committee approved Trump's sweeping tax-cut bill and set a full House floor vote within hours.

Akhtar Faruqui FXStreet

GBP/USD is depreciating after the mixed S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) data was released on Thursday. The pair has maintained its position near 1.3468, the highest since February 2022, reached on Wednesday, and is trading around 1.3410 during the European hours.

The seasonally adjusted UK Manufacturing Purchasing Managers’ Index unexpectedly fell to 45.1 in May from 45.4 in April, as the market forecast was a 46.0 reading in the reported period. Meanwhile, the Preliminary UK Services Business Activity Index rose to 50.2 in May against the previous 49.0 reading and expected 50.0 figure.

Additionally, the improved US Dollar (USD) pulls back the GBP/USD pair ahead of the S&P Global US Purchasing Managers’ Index (PMI) data due later in the North American session. The overall business activity is expected to expand at a steady pace in May, which could contribute support for the Greenback.

The US Dollar Index (DXY), which tracks the US Dollar (USD) against a basket of six major currencies, appreciates after halting its three-day losing streak. At the time of writing, the DXY is holding its position around 99.70, slightly above two-week lows.

The House Rules Committee approved US President Donald Trump's sweeping tax-cut bill. The US House Rules Committee stated that a full House floor vote on the Trump tax cut bill is set to take place within hours. The bill was supported by the Committee 8-4 vote after a long 22-hour session on Wednesday. Republican leaders set up two votes to begin debate and to pass the bill before sunrise on Thursday, per Reuters.

Economic Indicator

S&P Global Composite PMI

The Composite Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging private-business activity in UK for both the manufacturing and services sectors. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation.The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the UK private economy is generally expanding, a bullish sign for the Pound Sterling (GBP). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for GBP.

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