UK preliminary Composite PMI expands strongly to 53.9 vs. 51.4 prior

Akhtar Faruqui FXStreet

According to flash estimates, the Composite PMI in the United Kingdom (UK) economy expanded at a faster pace to 53.9 in January from 51.4 in December, also beating estimates of 51.7. The overall business activity rose strongly as activities in both the manufacturing and service sectors grew sharply.

The Services PMI has come in at 54.3, higher than the 51.7 estimate and the prior release of 51.4. The Manufacturing PMI jumped to 51.6 from the previous reading of 50.6.

Market reaction

The Pound Sterling (GBP) has reacted positively to the PMI data. GBP/USD jumps to near 1.3520 as of writing.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.07%	-0.11%	-0.25%	0.02%	-0.09%	0.12%	0.11%
EUR	-0.07%		-0.18%	-0.32%	-0.05%	-0.16%	0.04%	0.04%
GBP	0.11%	0.18%		-0.13%	0.12%	0.00%	0.22%	0.21%
JPY	0.25%	0.32%	0.13%		0.27%	0.16%	0.35%	0.36%
CAD	-0.02%	0.05%	-0.12%	-0.27%		-0.12%	0.09%	0.09%
AUD	0.09%	0.16%	-0.01%	-0.16%	0.12%		0.21%	0.21%
NZD	-0.12%	-0.04%	-0.22%	-0.35%	-0.09%	-0.21%		-0.01%
CHF	-0.11%	-0.04%	-0.21%	-0.36%	-0.09%	-0.21%	0.00%

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).

(This section below was published at 07:27 GMT as a preview of the preliminary UK S&P Global PMI data for January.)

The UK services PMI overview

The United Kingdom (UK) docket has the preliminary Purchasing Managers’ Index (PMI) data for January to be released by the S&P Global on Friday, later this session at 09:30 GMT.

S&P Global Services PMI is expected to come in at 51.7, slightly up from 51.4 recorded in the previous month.

How could it affect GBP/USD?

S&P Global Services PMI may fail to impact the Pound Sterling (GBP against the US Dollar (USD) as traders widely expect the Bank of England (BoE) to stay put on a gradual easing path, even as price pressures accelerated in December. Manufacturing and Composite PMI will also be eyed.

As expected, the upbeat UK Retail Sales report fails to boost the GBP/USD pair. UK Retail Sales rose 0.4% month-over-month (MoM) in December, against an expected decrease of 0.1%. The core Retail Sales, stripping the auto motor fuel sales, increased 0.3% MoM in December, compared with the previous decline of 0.4% (revised from 0.2% decline). Meanwhile, the annual Retail Sales climbed 2.5%, while the annual core Retail Sales jumped 3.1%.

The GBP/USD pair may regain its ground as the US Dollar (USD) could weaken amid risk aversion driven by geopolitical tensions. US President Donald Trump initially threatened tariffs over his Greenland plan, but later reversed course after reaching a NATO framework agreement for a potential deal.

Technically, the GBP/USD pair inches lower after gaining more than 0.5% in the previous session, trading around 1.3490 at the time of writing. The pair may target the three-month high of 1.3562 as the next barrier. The immediate support lies at the nine-day Exponential Moving Average (EMA) of 1.3450, followed by the 50-day EMA at 1.3397.

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.

EUR/USD stays below 1.1750 ahead of US PMI data

EUR/USD trades marginally lower on the day below 1.1750 but clings to strong weekly gains. The data from Germany and the Eurozone showed that the business activity in private sector expanded at a modest pace in January, helping the Euro hold its ground. In the second half of the day, US PMI data will be watched closely.

GBP/USD climbs above 1.3500 on upbeat UK data

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Gold pulls away from record-high, holds above $4,900

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