Pound Sterling awaits Construction PMI data
- GBP/USD is recovering after a better-than-projected UK Services PMI for September, which landed at 49.3, higher than expectations.
- The improvement in the UK economic data is due to sustained easing of inflationary pressure and optimism among businesses as the Bank of England paused the policy-tightening spell.
- However, the broader outlook for the UK economy is still sluggish amid higher borrowing costs, a weak order book, and rising oil prices and supply chain disruptions.
- BoE Governor Andrew Bailey warned about potential inflation shocks but remained confident of bringing down inflation to 5% or less by year-end.
- Investors will now focus on the S&P Global Construction PMI data for September, which is expected to ease to 49.9 against the 50.8 reading from August.
- The US Dollar Index (DXY) is finding an intermediate cushion near 106.50, but volatile action is expected as investors shift focus to the September Nonfarm Payrolls (NFP) report after weak ADP job data.
- Soft labor market data is expected to fade expectations of one more interest rate hike from the Federal Reserve (Fed) in the remainder of 2023.
- The US ISM Services PMI matched expectations at 53.6 but remained below the August reading of 54.5.
- New Orders dropped significantly to 51.8 against the former release of 57.5.
Overall, GBP/USD is likely to continue its upside momentum in the near term, while the US Dollar is poised to remain under pressure. However, investors should be cautious of the potential for volatile trading ahead of the key US NFP report.
- GBP/USD is recovering after a better-than-projected UK Services PMI for September, which landed at 49.3, higher than expectations.
- The improvement in the UK economic data is due to sustained easing of inflationary pressure and optimism among businesses as the Bank of England paused the policy-tightening spell.
- However, the broader outlook for the UK economy is still sluggish amid higher borrowing costs, a weak order book, and rising oil prices and supply chain disruptions.
- BoE Governor Andrew Bailey warned about potential inflation shocks but remained confident of bringing down inflation to 5% or less by year-end.
- Investors will now focus on the S&P Global Construction PMI data for September, which is expected to ease to 49.9 against the 50.8 reading from August.
- The US Dollar Index (DXY) is finding an intermediate cushion near 106.50, but volatile action is expected as investors shift focus to the September Nonfarm Payrolls (NFP) report after weak ADP job data.
- Soft labor market data is expected to fade expectations of one more interest rate hike from the Federal Reserve (Fed) in the remainder of 2023.
- The US ISM Services PMI matched expectations at 53.6 but remained below the August reading of 54.5.
- New Orders dropped significantly to 51.8 against the former release of 57.5.
Overall, GBP/USD is likely to continue its upside momentum in the near term, while the US Dollar is poised to remain under pressure. However, investors should be cautious of the potential for volatile trading ahead of the key US NFP report.