- GBP/USD hit daily lows after US S&P Global PMI release.
- Business activity in the UK reignited recession fears, weakening the GBP.
- The market expects the Bank of England to raise interest rates by 50 bps on 2nd February – RTRS poll.
GBP/USD surrenders 1.2400 and falls towards the 1.2310 region amid a mixed-mood trading session as US stocks swing between gainers and losers. Despite this, the US dollar (USD) has lost traction and has fallen slightly, limiting the fall in GBP/USD. At the time of writing, GBP/USD is trading at 1.2320 after hitting a high of 1.2413.
GBP/USD Falls to 1.2260s on Better-than-Expected US PMI and Weak UK Data
Wall Street paints a mixed picture, but it’s only a matter of time before it turns positive. S&P Global reported that his December PMI for the United States (US) improved, with services PMI now at 46.6 versus an expected 44.7, and manufacturing up 46.8 versus an estimated 46.2. The S&P Global Composite, which measures both indices, rose 46.6, beating the expected figure of 45. Business activity in the US economy continues to show deterioration, although the downward trend has eased somewhat.
The S&P Global/CIPS Survey shows business activity in the UK has disappointed investors, with business activity falling at its fastest pace in two years. “January’s weaker-than-expected PMI highlights the risk of a recession in the UK,” said Chris Williamson, chief business economist at S&P Global.
Meanwhile, a Reuters poll found that 29 of 42 economists expect the Bank of England to raise interest rates by 50bps to 4% on February 2, while 13 expect a 25bps hike. was shown to exist. In addition, the economist he expects a peak rate of 4.25%.
Also read: Reuters poll: Bank of England to raise bank rates by 50 bps to 4.00% on Feb 2
GBP/USD Technical Analysis
Technically, the GBP/USD daily chart suggests the pair is consolidating around 1.2400 and we cannot test the 1.2500 mark for more. It has also been hitting consecutive lows over the past few days, which could lead to further losses. Notably, GBP/USD appears to be forming a double top. However, GBP/USD must break below his Jan. 6 low of 1.1841 to see its effectiveness.
GBP/USD key support levels are at the 1.2300 figure, 20-day EMAs at 1.2222 and 1.2100. Conversely, the key resistance level for GBP/USD is 1.2400, followed by YTD highs of 1.2454 and 1.2500 marks.