GBP/USD stretches higher, approaching 1.3800 with the US Dollar at long-term lows

The Pound appreciates further and hits fresh 4-year highs near 1.3800.
UK Manufacturing PMI remained unchanged, but employment output and new orders dropped.
US debt fears and Trump's attacks on the Fed are hurting the US Dollar.

Guillermo Alcala FXStreet

The Pound is accelerating its uptrend on Tuesday, unaffected by rather downbeat UK manufacturing PMI data. US Dollar weakness is driving markets today with tariff uncertainty, renewed concerns about the US fiscal health, and rising bets on Fed cuts crushing demand for the US Dollar.

UK manufacturing activity has remained steady at 47.7 in June, but new orders, employmen,t and output declined from the previous month and pointing to further contraction in the coming months.

US debt, hopes of Fed cuts are hammering the USD

These figures, however, have failed to curb Sterling’s rally. The GBP/USD appreciates nearly 0.4% so far today after having reached its highest levels since October 2021, at 1.3790.

In the US, mounting concerns about the impact of Trump’s “Big, beautiful bill” on the country's fiscal health are weighing on the USD as the bill goes through a lengthy voting process in the Senate.

Beyond that, Trump continued attacking Fed Chair Powell, calling for much lower interest rates and boosting hopes that the bank will ease its monetary policy between two and three times in the second half of the year. Later today, Powell will speak at a central bankers' summit in Sintra and might provide further insight into the bank´s monetary policy plans.

GBP/USD: Major resistance is at 1.3800 - UOB Group

The FX Strategy team at the UOB group sees the GBP/USD in a bullish trend, with major technical resistance at 1.3800: “We turned positive on GBP last Thursday. On Friday, we highlighted that 'the outlook for GBP remains positive, but it may consolidate for a couple of days first; the next technical objective is 1.3800.' We will maintain this view as long as the ‘strong support’ at 1.3645 (level previously at 1.3610) is not breached."
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Economic Indicator

S&P Global Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging business activity in the UK’s manufacturing sector. The data is derived from surveys of senior executives at private-sector companies. 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 manufacturing economy is generally expanding, a bullish sign for the Pound Sterling (GBP). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for GBP.

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