|

GBP/USD steady at 1.3518 as PMIs signal slowdown, Powell speech eyed

  • US Manufacturing PMI slipped to 52 and Services to 53.9, with tariffs driving price pressures higher.
  • UK Composite PMI fell to 51, missing forecasts, as both services and manufacturing activity slowed sharply.
  • Fed-BoE policy divergence favors GBP upside, though UK fiscal concerns limit Cable’s near-term bullish potential.

The Pound Sterling (GBP) remains steady during the North American session on Tuesday after business activity on both sides of the Atlantic slows down in September, according to Flash Purchasing Managers Indices (PMI) reports in the UK and the US. GBP/USD trades at 1.3518, virtually unchanged.

Sterling holds firm despite weak UK and US PMIs; central bank divergence underpins GBP but fiscal risks cap gains

The US Dollar (USD) seems to have found its feet as the US Dollar Index (DXY), which measures the buck’s value against a basket of six peers, is up 0.08% at 97.38. US Manufacturing PMI dipped to 52 from 53 in August. At the same time, the Services index fell from 54.5 to 53.9 in September.

Digging deep into the report, the survey of prices paid rose from 60.8 last month to 62.6 as companies cited tariffs as the principal cause of further cost increases.

In the meantime, traders’ eyes are set on Federal Reserve (Fed) Chair Jerome Powell's speech about the economic outlook, at around 16:30 GMT.

In the UK, S&P Global revealed that the Composite Purchasing Managers Index (PMI) covering the services and manufacturing sectors slowed to 51 in September from 53.5 in August, well below the economists' estimates of 52.7.

Despite this, GBP/USD managed to remain steady as the Sterling remains up 8% this year against the US Dollar.

Central bank divergence, favors GBP/USD upside

Nevertheless, divergence between the Federal Reserve and the Bank of England (BoE) would reduce the rate differential between the two countries. This favors further GBP/USD upside, but economists’ concern about the UK fiscal position might prevent Cable from reaching higher prices in the near term.

In the meantime, comments by Fed officials remain mixed, but not so in the BoE. Huw Pill said that inflation has proved to be more stubborn than expected and that it is declining at a sluggish pace.

Meanwhile, Chicago’s Fed Austan Goolsbee says the US remains in a “low hiring, low layoffs” phase, and added that the bank needs to get inflation to 2%. Recently, the Vice Chair for Supervision Michelle Bowman said that the Fed needs to cut three times total for 2025, including last week’s decision.

GBP/USD Price Forecast: Remains subdued at around 1.3480-1.3530

The pair consolidates at around the 20-day SMA at 1.3523, with traders unable to push prices above last Friday’s high of 1.3559. If done, this clears the path to challenge 1.3600 and higher prices. Conversely, the lack of follow-through to the upside suggests that buyers are reluctant to open fresh long positions.

Conversely, if GBP/USD drops below 1.3500, sellers could push prices towards the 100-day SMA at 1.3481, ahead of the 50-day SMA at 1.3467.

GBP/USD daily chart

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.46%-0.35%-0.06%0.38%0.02%0.21%-0.30%
EUR0.46%0.13%0.37%0.82%0.43%0.64%0.13%
GBP0.35%-0.13%0.18%0.72%0.33%0.54%0.06%
JPY0.06%-0.37%-0.18%0.44%0.06%0.27%-0.22%
CAD-0.38%-0.82%-0.72%-0.44%-0.38%-0.17%-0.65%
AUD-0.02%-0.43%-0.33%-0.06%0.38%0.22%-0.27%
NZD-0.21%-0.64%-0.54%-0.27%0.17%-0.22%-0.52%
CHF0.30%-0.13%-0.06%0.22%0.65%0.27%0.52%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

GBP/USD defends 1.3300 after strong UK PMI data

Following Thursday's sharp decline, GBP/USD clings to small gains above 1.3300 in the American session on Friday, supported by the upbeat UK Retail Sales and July PMI data. Nevertheless, the pair's upside remains capped as investors cling to a cautious stance amid a further escalation of tensions in the Middle East. The US July PMI data failed to trigger relevant price action.

EUR/USD remains below 1.1400 after mixed US PMIs

EUR/USD pressures daily lows below the 1.1400 mark in the American session on Friday. Mixed S&P Global PMIs, as manufacturing output contracted while services activity expanded in July, triggered no relevant market reaction. The focus remains in Middle East developments and inflation-related concerns.

Gold holds above $4,050 but momentum still missing

Gold builds on its modest intraday bounce and climbs above the $4,050 level on Friday, hitting a fresh daily high amid a modest US Dollar pullback. The fundamental backdrop, however, warrants some caution before confirming that the pullback from an over two-week high, touched on Wednesday, has run its course and positioning for any meaningful upside.

Ethereum: Derivatives interest in ETH improves, but signs of caution remain

Ethereum is hovering slightly below the $1,900 level, down 3% on Thursday following a slight expansion in derivatives interest. The top altcoin's open interest has increased to 14.60 million ETH, marking a 600K ETH increase over the past two days and its highest level since June 7.

XRP retreats as ETF interest cools
Ripple (XRP) slides toward the short-term $1.10 support on Friday, as broader crypto market sentiment weighs on crypto assets. The sell-off mainly stems from fears of inflation in the United States (US) amid the ongoing war in the Middle East and rising Oil prices.
US Dollar mid-year outlook: Exceptional currency, exceptional risks?
The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.