UK PMIs Drop Again
GBPUSD is pulling back from earlier highs on the session as traders digest the latest UK economic data released this morning. Both the factory and non-factory sector PMIs came in below expectations for last month. The manufacturing PMI was seen at 50.3, down from 51.5 prior and expected. This marks the second consecutive month of weaker growth in the sector with the index hitting six-month lows on the back of a sharp drop in new orders. Notably, UK firms were seen expressing a high level of uncertainty ahead of the upcoming UK Autumn Budget next week. The services PMI was weak also, falling to 51.8 from 52.4 prior, well below the 52.3 the market was looking for, hitting its lowest level since June.
BOE Easing Expectations
In all, the data was net-negative for the Pound. Recent data strength ahead of these readings has been largely positive, making it harder for the market to get a read on how the BOE will proceed. However, today’s data shows that weakness do clearly remain in the UK economy, supporting the view that the bank will push ahead with fresh easing at the November BOE meeting. Against the backdrop of a less dovish Fed outlook, there is room for GBPUSD to move lower near-term, particularly if we see any upside surprises in today’s US PMIs.
Technical Views
GBPUSD
The sell off in GBPUSD has seen the market breaking below the 1.30 level, now testing the rising trend line from YTD lows. With momentum studies bearish, the risks of a further break lower are seen with 1.2832 the next support to note, ahead of a deeper drop towards 1.2677 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.