Pound Sterling clings to gains above 1.2700 despite weak preliminary UK PMI
The Pound Sterling (GBP) holds strength above 1.2700 in Thursday’s London session after the release of the weak preliminary United Kingdom (UK) PMI data for May. The S&P Global/CIPS PMI report shows that the Composite PMI dropped at a faster pace to a two-month low at 52.8 from the estimates of 54.0 and the prior reading of 54.1. The sharp decline in the Composite PMI was driven by weak Services PMI, which fell to a six-month low at 52.9 from the consensus of 54.7 and the former reading of 55.0. The Manufacturing PMI rose above the 50.0 threshold that separates expansion from contraction and grew strongly to 51.3. Economists forecasted that the factory PMI would have increased to 49.5 from 49.1 in April.
The GBP/USD pair remains firm as traders pare bets that were leaned towards the Bank of England (BoE) shifting to policy normalization in the June meeting after remaining hawkish for more than two years on interest rates. The expectations favoring the BoE that it will start reducing interest rates from the June meeting have diminished as the Consumer Price Index (CPI) report for April showed that inflation softened at a slower pace than expected. Read more...
GBP/USD Forecast: Pound Sterling struggles to remain bullish after mixed UK PMI
GBP/USD climbed to a two-month-high above 1.2750 on Wednesday after the UK inflation data for April came in stronger than expected but lost its traction in the American session to close the day little changed. Early Thursday, the pair trades in a tight range above 1.2700.
The minutes of the Federal Reserve's (Fed) April 30-May 1 policy meeting showed that some policymakers were willing to reconsider rate increases if necessary. Although the meeting took place before the US inflation data for April showed modest progress in disinflation, the US Dollar (USD) gathered strength against its rivals after the release of the minutes. Read more...
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