GBP declines following weak PMI reading
Daily Currency Update
On Wednesday, the GBP/USD pair experienced a decrease, reaching a fresh 7-week low at 1.2615. This drop was triggered by UK August PMI data that fell below expectations, suggesting that the 14 anticipated interest rate hikes by the Bank of England are having a dampening effect on the British economy.In spite of the decline, the British pound continues to be the top-performing major currency against the dollar so far this year. This is due to the fact that UK inflation, and therefore British interest rates, remain the highest among the G7 nations, thus mounting more pressure on the BoE to increase interest rates.
Key Movers
On Wednesday, the U.S. dollar slightly declined in comparison to a range of other currencies. This movement was in response to data indicating that U.S. business activity in August approached a point of stagnation. The growth rate was the lowest since February, primarily due to a contraction in the demand for new business within the expansive service sector.Traders now anticipate that there will be restrained activity in the currency markets leading up to a speech by Jerome Powell, the Federal Reserve Chair, scheduled to take place during the central bank symposium in Jackson Hole.
Expected Ranges
- GBP/USD: 1.2645 - 1.2725 ▼
- GBP/EUR: 1.1675 - 1.1755 ▲
- EUR/USD: 1.0805 - 1.0875 ▼