Pound to Dollar FX Outlook: GBP/USD Ticks up following UK and US PMIs

September 24, 2024 - Written by David Woodsmith

STORY LINK Pound to Dollar FX Outlook: GBP/USD Ticks up following UK and US PMIs

The Pound US Dollar (GBP/USD) exchange gained ground on Monday following the publication of the UK’s and the US’s latest PMI data.

At the time of writing, GBP/USD was trading at approximately $1.3357, up roughly 0.2% from the start of Monday’s session.

The pound (GBP) fluctuated on Monday, gaining against the Euro (EUR) but stumbling elsewhere, as the UK's preliminary PMI data for September missed the mark.

The latest flash PMI readings painted a picture of dual slowdowns in both the services and manufacturing sectors, though both remained in expansion territory.

The services sector, the UK's economic powerhouse, slipped to 52.8 from 53.7, falling short of market predictions of 53.5.

Similarly, the manufacturing index also stepped back, dropping to 51.5 and failing to meet expectations of maintaining a 52.5 reading.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented: ‘A slight cooling of output growth across manufacturing and services in September should not be seen as too concerning, as the survey data are still consistent with the economy growing at a rate approaching 0.3% in the third quarter, which is in line with the Bank of England’s forecast.’

Although Sterling sentiment weakened in the wake of the release, the overall PMI reading still indicated modest economic growth, which helped to cap any further GBP losses.

US Dollar (USD) Weakens following US PMIs

The US Dollar (USD) faced fresh selling pressure on Monday following the publication of the latest S&P Global preliminary PMIs for September.

The latest data showed that the manufacturing index missed forecasts, slipping to 47 from 47.9, contrary to an expected rise to 48.5. Although the services index slightly beat expectations, coming in at 55.4 compared to the forecast of 55.3, it still marked a decline from August’s 55.7 reading.

This mixed economic performance, coupled with a generally positive risk sentiment in the market, kept the USD on the defensive throughout Monday’s European trading hours.

Looking ahead, the primary driver of movement for the Pound US Dollar exchange rate on Tuesday will likely be some mid-tier data from the US, amid a lack of any further economic releases.

The latest CB consumer confidence index is scheduled for release on Tuesday afternoon and could undermine the ‘greenback following the release should a predicted downturn in consumer confidence be confirmed.

Meanwhile, the Pound faces a quiet day on the data front, leaving GBP exchange rates vulnerable to broader market risk dynamics.

However, a boost in market optimism could potentially lift Sterling sentiment on the back of its nature as an increasingly risk-sensitive currency.

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TAGS: Pound Dollar Forecasts