Pound Sterling Price News and Forecast: GBP plunges as vulnerable PMI deepens recession risks

GBP/USD Forecast: Sellers retain control as Pound Sterling fails to clear 1.2730

After falling toward 1.2600 on Wednesday, GBP/USD made a sharp U-turn and closed the day virtually unchanged above 1.2700. The pair, however, came under renewed bearish pressure in the European session on Thursday and broke below 1.2700.

Following the dismal UK PMI data, Pound Sterling came under selling pressure as investors reassessed the Bank of England's rate outlook. According to Reuters, markets are currently pricing in a less than 50% probability of the BoE peak rate reaching 6%. Highlighting dovish BoE bets, the rate-sensitive 2-year UK gilt yield fell nearly 4% on Wednesday and broke below 5%. Read more...

Pound Sterling plunges as vulnerable PMI deepens recession risks

The Pound Sterling (GBP) witnessed a breakdown of the consolidation formed above 1.2700 as bullish market sentiment failed to neutralize the impact of vulnerable British PMIs reported by S&P Global on Wednesday. The agency reported that factory activities were at their lowest since the pandemic period as firms underutilized their operating capacity due to a bleak demand outlook.

Fears of a recession in the UK economy deepened on Wednesday as warning from Bank of England (BoE) policymakers about significant upside risks to corporate defaults strengthened after the release of vulnerable PMIs. Deepening recession fears are forcing investors to bet on a lower interest rate peak. A poll from Reuters shows that the BoE could pause the rate-tightening spell after an interest rate hike in September. Read more...