EURUSD recovered ground towards the end of the NY session, despite hot US Core PCE

• The US Dollar got bolstered by US core PCE but weakened towards the close of Wall Street.
• GDP in France and Spain weakened, while inflation in Germany continued its uptrend, above 10%.
• EURUSD is neutral-to-downward biased, though slightly tilted to the upside, facing strong resistance at the 100-DMA.

The EURUSD finished Friday’s session almost flat at around 0.9960s with minuscule gains of 0.02%. US economic data bolstered the US Dollar due to further action warranted by the Fed; as its preferred gauge of inflation, the core Personal Consumption Expenditure (PCE) jumped above August’s figures, a headwind for the EUR. Nevertheless, the Shared currency recovered some ground against the USD at the New York close. At the time of writing, the EURUSD is trading at 0.9966, slightly above its opening price.

The Federal Reserve’s gauge of inflation jumps the 5% threshold

Wall Street finished the day with solid gains. Even though the narrative of a possible Federal Reserve pivot circulates in the financial markets, US economic data, particularly inflation, could prove it wrong.

The US Department of Commerce revealed that the US core PCE expenditure for September expanded by 0.5% MoM, in line with estimates, while the year-over-year reading increased by 5.1%, below expectations but above the previous month’s 4.9%, on Friday. Another report revealed by the US Labor Department reported that the Employment Cost Index (ECI) for Q3 increased by 1.2%, in line with Bloomberg’s estimates, and lower than the second quarter by 1.4%.

Data did not surprise traders, which turned to risk-perceived assets, speculating that a Fed pivot is imminent. Nevertheless, Friday’s data further justified the case for the Fed’s 75 bps interest-rate hike at the November meeting, while odds for another significant increase at the December meeting jumped from yesterday’s 34.1% to 44.9%.

The markets’ reaction to the headlines witnessed the EURUSD sliding from the daily high of 0.9989 to the daily low of around 0.9920s. However, as the North American session progressed, the EURUSD bounced off the lows and finished the session around the 0.9960s.

Consumer sentiment is unchanged, while US inflation expectations ease

Aside from US inflation data, the University of Michigan Consumer Sentiment October’s final reading came at 59.9, while inflation expectations barely moved. According to the survey, expectations for inflation in a one-year horizon rose to 5% from 5.1%, while for five years is estimated at 2.9%.

Of late, the Dallas Fed Trimmed Mean PCE for September edged lower from 6% to 4.3%. At the same time, the Atlanta Fed GDPNow Forecast for Q4 is 3.1%.

Growth in France and Spain decelerated, and Germany’s inflation spiked

In the meantime, the European economic calendar reported Gross Domestic Product (GDP), inflation, and the EU’s Economic Sentiment, for France, Spain, Germany, and the Euro area, respectively. Growth in France and Spain for the Q3 came in line with estimations, though they flashed recession signs as both countries trail the second quarter readings.

At the same time, Germany reported inflation for October on its preliminary reading, increasing by 10.4% YoY, vs. estimates of 10.1%, and exceeding the previous month’s reading.

Therefore, estimations for further tightening by the European Central Bank (ECB) are warranted,  as some ECB speakers, namely Muller, Vasle, and Villeroy, commented that interest rates are still low, not at a restrictive level. It’s worth pointing out that Vasle said he expects further rate increases, while Villeroy added that the ECB will decide on interest rate increases, meeting by meeting.

Given the abovementioned backdrop, the ECB and the Federal Reserve will continue to tighten monetary conditions, which is positive for both the Euro and the US Dollar. Nevertheless, interest rate differentials and peak objectives amid the current high inflationary outlook would favor the US Dollar, so the EURUSD would likely be under selling pressure, keeping the exchange rates below parity.

EURUSD Price Forecast: Technical outlook

Despite closing in an upbeat tone on Friday, the EURUSD remains neutral-to-downward biased, as depicted by the daily chart. Traders should note that the EUR had risen in four of the last five trading days and stayed above the 50-day Exponential Moving Average (EMA). Nevertheless, on the only day that the EURUSD climbed toward the 100-day EMA, it was rejected, and the pair tumbled toward the October 27 daily low at 0.9957.

The Relative Strength Index (RSI) oscillates in bullish territory, which suggests that buyers are gathering momentum. However, to shift the bias to neutral, EURUSD buyers must conquer the 100-day EMA and 1.0100. And if the Euro clears 1.0200, a move towards the 200-EMA is on the cards.

On the flip side, key support levels lie at the 50-day EMA at 0.9887. Once cleared, the following support would be the 20-day EMA at 0.9838, ahead of 0.9800, followed by October’s monthly low of 0.9631.

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 EUR/USD regains some ground lost and re-targets 0.9800

• EUR/USD bounces off lows near the 0.9750 region.
• German 10-year bund yields surpass the 2.45% level.
• Weekly Claims, Philly Fed index, Fedspeak come next in the NA session.

The European currency regains a small smile and motivates EUR/USD to rebound from earlier lows in the mid-0.9700s on Thursday.

EUR/USD supported near 0.9750 so far

EUR/USD manages to regain some buying interest and recoup part of the ground lost following Wednesday’s strong decline, retargeting the 0.9800 region amidst the so far tepid downside momentum in the dollar.

Also underpinning the daily uptick in spot, the German 10-year benchmark bund yields rise past the 2.45% level for the first time since August 2011, in line with the uptrend observed in their US pees across the curve.

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EUR/USD Price Analysis: Key resistance lies at the parity zone

EUR/USD wobbles around the 0.9800 zone ahead of NFP.

Bullish attempts face a tough barrier at the parity level.

EUR/USD gyrates around the 0.9800 region ahead of the release of US Nonfarm Payrolls on Friday.

The resumption of the buying interest is expected to meet a solid hurdle at recent peaks around the parity zone. Ideally, EUR/USD should leave behind this key resistance zone in the near term to allow for the continuation of the rebound.

In the longer run, the pair’s bearish view should remain unaltered while below the 200-day SMA at 1.0616.

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AUD/NZD to slide towards the 1.12 level – OCBC

AUD/NZD continued to trade with a heavy downside bias amid growing policy divergence between the Reserve Bank of Australia and the Reserve Bank of New Zealand. Economists at OCBC Bank maintain a short bias targeting 1.12.

Risks remained skewed to the downside

“RBNZ’s accompanying MPS was slightly more hawkish than expected as it noted that the MPC considered 50, 75 bps at this meeting; core CPI is ‘too high’ and lower NZD if sustained poses further upside risk to CPI.”

“We maintain our tactical short play on AUD/NZD, targeting 1.12, 1.1050 objectives.”

“Daily momentum is bearish while RSI fell. Risks remained skewed to the downside.”

“Support at 1.1240, 1.1210 levels.”

“Resistance at 1.1305 (21 DMA), 1.1380 levels.”

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EUR/USD Price Analysis: Bears now target 0.9500

EUR/USD drops for the seventh straight session and tests 0.9535.

Below the 2022 low at 0.9535 comes the 0.9500 region.

EUR/USD extends the leg lower to the proximity of 0.9530 earlier on Wednesday, an area last traded back in June 2002.

Odds for extra weakness in the European currency remain well on the table so far with the immediate target at the 2022 low at 0.9552 (September 26). A deeper drop could challenge the round level at 0.9500 ahead of the weekly low at 0.9411 (June 17 2002).

In the longer run, the pair’s bearish view should remain unaltered while below the 200-day SMA at 1.0667.

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Brent Oil: Below $83.00 next supports align at $77.50 and $73.00 – SocGen

On the first day of the last week of September, crude oil extended last week’s losses. Economists at Société Générale expect Brent to head towards $77.50, then $73.00 on a drop under $83.00.

An initial rebound is on the cards

“Daily MACD is anchored within negative territory which denotes steady downward momentum.”

“An initial bounce is not ruled out, however, $93.50 should provide resistance.”

“Brent is close to downside projections of $83.00. Next potential supports are at the lower band of a descending channel at $77.50 and $73.00.”

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US Dollar Index Price Analysis: Bearish moves seen as buying opportunities

DXY climbs to fresh highs near 112.00 before losing momentum.

Further upside remains well on the cards for the dollar near term.

DXY corrects lower after two consecutive daily advances, including new 20-year highs just below the 112.00 mark earlier on Thursday.

The prospects for extra gains in the dollar should remain unchanged as long as the index trades above the 7-month support line near 106.80. That said, occasional bouts of weakness could be deemed as buying opportunities with the immediate target at the 2022 high at 111.81 (September 22).

In the longer run, DXY is expected to maintain its constructive stance while above the 200-day SMA at 101.95.

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NZD/USD struggles near its lowest level since April 2020 as another big Fed rate hike looms

• NZD/USD drops to its lowest level since April 2020 amid sustained USD buying interest.
• Retreating US bond yields, the risk-on mood caps the buck and limits losses for the pair.
• Investors now seem to move to the sidelines and await the crucial FOMC policy decision.

The NZD/USD pair recovers a few pips from its lowest level since April 2020 touched in the last hour and is currently placed in neutral territory, around the 0.5885 region. That said, any meaningful recovery still seems elusive as investors gear up for another supersized rate hike by the Federal Reserve.

The stronger US CPI report released last week reaffirmed expectations that the USD central bank will continue to tighten its monetary policy at a faster pace. This remains supportive of a strong follow-through US dollar move up to a fresh 20-year peak, which, in turn, should continue to act as a headwind for the NZD/USD pair.

That said, a softer tone surrounding the US Treasury bond yields and a generally positive risk tone keep a lid on any further gains for the safe-haven greenback. Apart from this, slightly oversold conditions on short-term charts offer some support to the risk-sensitive kiwi and help limit losses for the NZD/USD pair.

Apart from this, the intraday bounce could further be attributed to some repositioning trade ahead of the highly-anticipated FOMC policy decision, scheduled to be announced later during the US session. The Fed is widely expected to stick to its aggressive policy tightening path and hike interest rates by at least 75 bps.

Apart from this, the focus will be on the updated economic projections and the dot plot. Furthermore, Fed Chair Jerome Powell's remarks at the post-meeting press conference will be looked upon for clues about future rate hikes. This, in turn, will influence the USD and provide a fresh directional impetus to the NZD/USD pair.

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US Dollar Index to extend upward momentum on a break above 111 – SocGen

The US Dollar Index (DXY) moves sideways slightly above 109.50. Economists at Société Générale expect the index to enjoy further gains on a break past 111.

Short-term downtrend likely on a dip under 107.60

“If the index establishes itself above the high formed earlier this month at 111 – which is also a graphical level, the up move is expected to extend further towards next projections at 112.60/113.00.” 

“It is worth noting that the daily MACD has started posting negative divergence. Although this is not a reversal signal, it does point towards receding upward momentum.”

“Defending the 50-DMA at 107.60 would be essential for persistence in uptrend. Should a break materialize, a short-term downtrend is likely.”

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GBP/USD remains on the defensive amid modest USD uptick, eyes US data for fresh impetus

GBP/USD comes under renewed selling pressure on Thursday, though lacks follow-through.

Aggressive Fed rate hike bets revive the USD demand and exert some downward pressure.

A positive risk tone caps the safe-haven buck and helps limit the downside for the major.

The GBP/USD pair struggles to capitalize on the previous day's modest uptick and meets with a fresh supply on Thursday. Spot prices remain on the defensive through the first half of the European session, though manage to hold above the 1.1500 psychological mark.

The US dollar catches fresh bids amid expectations for a more aggressive policy tightening by the Fed and turns out to be a key factor exerting some downward pressure on the GBP/USD pair. The stronger US consumer inflation data released on Tuesday all but confirmed that the Fed will hike interest rates at a faster pace. In fact, the implied odds for a full 1% lift-off at the September FOMC meeting currently stand at 30%.

Furthermore, the markets have been pricing in the possibility of another supersized Fed rate hike move in November. This remains supportive of elevated US Treasury bond yields and continues to underpin the greenback. That said, a generally positive risk tone is capping gains for the safe-haven buck. Apart from this, prospects for a 75 bps rate hike by the Bank of England on September 22 offer support to the GBP/USD pair.

This makes it prudent to wait for strong follow-through selling before positioning for an extension of the post-US CPI sharp retracement slide from a two-week high. In the absence of any relevant economic data from the UK, traders look forward to the US macro releases for some impetus later during the early North American session.

Thursday's US economic docket features the release of monthly Retail Sales figures, Weekly Initial Jobless Claims, Regional Manufacturing Indices, and Industrial Production data. This, along with the US bond yields and the broader risk sentiment, will influence the USD and produce short-term trading opportunities around the GBP/USD pair.

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EU proposes windfall levy to claw back surplus profits from fossil fuel companies

The European Commission announced on Thursday that it proposed a voluntary target for European Union countries to cut overall monthly electricity use by 10% compared to the same period in recent years, as reported by Reuters.

Additional takeaways

"EU Commission proposes 180 euros per megawatt hour revenue cap for non-gas fuelled power generators."

"EU revenue cap would apply to wind, solar, biomass, lignite, nuclear and some hydropower generators."

"EU proposes windfall profit levy to claw back surplus profits from fossil fuel companies."

"EU levy would recoup 33% of oil, gas, coal, refining companies' surplus taxable profits in the fiscal year 2022."

"EU levy would apply to fossil fuels companies that have tax obligations in EU countries."

"EU proposes mandatory target for EU countries to cut electricity use 5% during peak price periods."

Market reaction

The shared currency holds its ground following this development and the EUR/USD pair was last seen rising 0.32% on the day at 1.0002.

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AUD/USD ascends to 0.6900 neighbourhood, nearly two-week high amid weaker USD

• AUD/USD builds on last week’s late bounce and gains traction for the second straight day.
• Retreating US bond yields, a positive risk tone undermines the USD and extends support.
• Recession fears might cap the risk-sensitive aussie ahead of the US CPI report on Tuesday.

The AUD/USD pair catches some bids for the successive straight day on Monday and builds on last week's bounce from sub-0.6700 levels or the lowest since July 14. This also marks the third day of a positive move in the previous four and lifts spot prices to a more than one-week high, closer to the 0.6900 mark during the mid-European session.

A combination of factors force the US dollar to prolong its recent sharp pullback from a two-decade high, which, in turn, is seen lending support to the AUD/USD pair. The markets already seem to have priced in a supersized 75 bps rate hike by the Federal Reserve at the next policy meeting on September 20-21. Furthermore, a modest downtick in the US Treasury bond yields seems to weigh on the greenback.

Apart from this, a generally positive tone around the equity markets further undermines the safe-haven buck and benefits the risk-sensitive aussie. That said, growing recession fears, amid the prospects for a faster policy tightening by major central banks and economic headwinds stemming from fresh COVID-19 curbs in China could cap optimism. This, in turn, warrants some caution for bullish traders.

Investors might also refrain from placing aggressive bets and prefer to move to the sidelines ahead of the latest US consumer inflation figures, due for release on Tuesday. The crucial US CPI report for August will play a key role in influencing the Fed's policy outlook. This will drive the USD demand in the near term and help determine the next leg of a directional move for the AUD/USD pair.

In the meantime, spot prices are more likely to consolidate in a range amid absent relevant market-moving economic releases from the US on Monday. That said, the US bond yields, along with the broader risk sentiment, might provide some impetus to the greenback and allow traders to grab short-term opportunities around the AUD/USD pair.

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EUR/USD: Further worsening of energy crisis can trigger a drop to the 0.96-0.97 area – ING

Post the European Central Bank (ECB) meeting, the energy crisis should remain the key driver for the euro. Therefore, economists at ING expect the EUR/USD pair to remain skewed to the downside.

The 0.98-0.99 area could prove to be a near-term anchor

“We expect the energy story to return firmly to the driving seat for EUR/USD after the post-ECB reaction. Barring a very hawkish surprise, this should keep EUR/USD below parity and prevent it to reconnect with the more supportive rate differential.” 

“The 0.98-0.99 area could prove to be a near-term anchor for EUR/USD, but a further worsening of the energy crisis and/or further dollar strengthening can trigger a drop to the 0.96-0.97 area.”

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EUR/JPY Price Analysis: The 142.30 region emerges as the next target

EUR/JPY adds to Friday’s small gains below 140.00.

The next hurdle of note turns up at the 142.30 zone.

EUR/JPY alternates gains with losses around 139.00 after bottoming out in earlier lows near 138.70 on Monday.

Extra gains in the cross are now favoured once it clears the recent high at 140.74 (September 2). Beyond this level, another visit of the weekly top at 142.32 (July 21) should re-emerge on the horizon prior to the 2022 peak at 144.27 (June 28).

While above the 200-day SMA at 134.54, the prospects for the pair should remain constructive.

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GBP/USD: Rebound remains capped below 1.1800 amid mixed UK PMIs, bear cross

GBP/USD whipsaws after UK services PMI improves but manufacturing PMI contracts.

The US dollar maintains the pullback amid cautious optimism, weaker Treasury yields.

Bear cross remains in play, as GBP bears eye a daily close below critical 1.1760 support line.

GBP/USD is struggling once again to extend the recovery while holding below the 1.1800 level, as bears remain unconvinced by the mixed UK Preliminary Business PMI surveys.

While activity in the services sector remained near July's 52.6, the manufacturing component tumbled to 46.0 in August from 52.1 in July, its lowest since May 2020.

Although a minor improvement in risk sentiment after an upside surprise delivered by the German Preliminary PMI eases fears over an imminent recession and lifts the European stocks. This helps the higher-yielding GBP to hold its ground against the US dollar.

The greenback pulls back from close to 19-year highs amid the retreat of the US Treasury yields across the curve. Investors also book profit on their USD longs after the recent relentless rise and ahead of a fresh batch of relevant US economic data. The US S&P Global Preliminary manufacturing and services PMIs will be reported in the NA session, followed by the New Home Sales release.

Despite the renewed upside, cable remains vulnerable, as the state of the UK economy remains dire amid surging inflation, the European gas crisis and political concerns.

As observed on cable’s daily chart, the price is clinging to the critical support line at 1.1760. A daily closing below the latter is required to cement the ongoing downtrend towards the falling trendline support at 1.1565.

Ahead of that, 1.1600 – the round figure will challenge the bullish commitments. The 14-day Relative Strength Index (RSI) has stalled its descent but sits just above the oversold territory, suggesting that the downside remains more compelling.

Further, the 21-Daily Moving Average (DMA) has cut the 50 DMA from above, representing a bear cross and adding credence to the bearish potential.

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EUR/USD: Break below 1.01 open up the July 14 cycle low near 0.9950 – BBH

EUR/USD declines toward 1.0100. A drop under this level would set up a test of the July 14 cycle low near 0.9950, economists at BBH report.

German August ZEW consumer survey was weak

“A break below 1.0110 would set up a test of the July 14 cycle low near 0.9950.”

“Expectations came in at -55.3 vs. -52.7 expected and -53.8 in July, while current situation came in at -47.6 vs. -49.0 expected and -45.8 in July. ZEW noted that ‘The still high inflation rates and the expected additional costs for heating and energy lead to a decrease in profit expectations for the private consumption sector’.”

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Recession concerns and the impact on long term yields – UOB

UOB Group’s Head of Markets Strategy Heng Koon How, CAIA, Senior FX Strategist Peter Chia, Rates Strategist Victor Yong and Markets Strategist Quek Ser Leang assess the ongoing recession fears and its effect on the long term yield.

Key Takeaways

“The Recession vs Inflation debate has intensified and taken an interesting turn. For now, it would appear that Recession fears are dominating amidst increasing signs of growth slowdown. However, it is important to note that Inflation risks are far from over and the US Federal Reserve (Fed) and other global central banks remain committed to continue their aggressive rate hikes in the months ahead.”

“We maintain our positive core view on a stronger USD and note that this latest USD rally still has legs and with USD strength extending further into this current Fed hiking cycle than in previous cycles. Elevated volatility and increasing safe haven needs are supportive of further USD strength.”

“In the Major FX, we lower our EUR/USD forecast and see risk of parity for the remaining months of the year as a worsening energy crisis in Europe and on-going political crisis in Italy nullify the yield support from the start of the ECB’s rate hiking cycle. On the other hand, USD/JPY is finally seeing prospects of topping out after the retreat in 10-year US Treasuries yield.”

“In terms of short-term rates outlook, we continue to see on-going rate hikes from the US Fed as well as other central banks in the months ahead. As such, the rise in short term rates is not over. We raise our year end forecasts for 3-month compounded SOFR and SORA to 3.30% and 2.60% respectively (from 2.99% and 2.29% previously).”

“As for long term yield outlook, elevated recession fears have started to dampen and weigh on long term yield. We lower our 10-year UST and SGS outlook for end of the year to 3.60% and 3.20% respectively (from 3.80% and 3.40% previously). Consequently, as a result of higher short term rates and the pull back in long term yield, yield curve inversion can persist for longer during high inflation regimes or until evidence that monetary policy tightening has peaked.”

“In terms of technical analysis, we note that after the recent heavy pullback in yield, the risk for 10-year US Treasuries yield is still clearly on the downside; next support levels to monitor are at 2.557% and 2.500%.”

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GBP/USD retreats further from multi-week high, slides below 1.2200 amid rebounding USD

GBP/USD slips back below the 1.2200 mark on Tuesday amid a goodish USD rebound.

Recession fears, US-China tensions over Taiwan drive safe-haven flows towards the USD.

Sliding US bond yields might cap the USD and lend support to the pair ahead of the BoE.

The GBP/USD pair witnessed a turnaround from the 1.2275-1.2280 region on Tuesday and retreats further from its highest level since June 27 touched the previous day. The steady intraday descent extends through the early part of the European session and drags spot prices below the 1.2200 mark in the last hour.

The US dollar stages a goodish rebound from a four-week low set earlier this Tuesday, which turns out to be a key factor exerting downward pressure on the GBP/USD pair. The market sentiment remains fragile amid growing worries about a global economic downturn. Apart from this, mounting diplomatic tensions ahead of the planned Taiwan visit by US House Speaker Nancy Pelosi is tempering investors' appetite for riskier assets and benefiting the safe-haven greenback.

The anti-risk flow, along with expectations that the Fed may not hike interest rates as aggressively as estimated, continue to drag the US Treasury bond yields lower. This might hold back the USD bulls from positioning for any meaningful upside. Apart from this, rising bets for a 50 bps rate hike by the Bank of England should continue to lend support to the British pound. The combination of factors could lend support to the GBP/USD pair and limit the downside.

Investors might also prefer to wait on the sidelines ahead of this week's central bank event risk and important US macro data. The BoE is scheduled to announce its monetary policy decision on Thursday, which could play a key role in influencing the near-term sentiment surrounding sterling. Investors will further take cues from the closely-watched US monthly jobs report (NFP) on Friday to determine the next leg of a directional move for the GBP/USD pair.

In the meantime, Tuesday's US economic docket, featuring the only release of JOLTS Job Openings data might provide some impetus later during the early North American session. Apart from this, the US bond yields and the broader risk sentiment would drive the USD demand, allowing traders to grab short-term opportunities around the GBP/USD pair. Nevertheless, it would be prudent to wait for strong follow-through selling before confirming that spot prices have topped out.

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GBP/USD falls towards 1.2000 as USD crawls higher ahead of data

GBP/USD returns to the red as the US dollar sees resurgent demand.

Lack of UK political news and risk-off flows weigh on cable.

The pair recaptures 21 DMA but RSI still remains bearish.

GBP/USD is extending its pullback from three-week highs of 1.2091 in the European session, as risk-off flows dominate amid the worsening European gas crisis and an imminent recession in Germany.

Investors seek refuge in the traditional safe-haven asset, the US dollar, as the buck picks up fresh bids to recapture 106.50 against its major peers. The ongoing sell-off in the US Treasury yields fail to deter the dollar bulls. The greenback also finds demand, as investors turn cautious ahead of the Fed’s expected 75 bps rate hike announcement.

Meanwhile, various factors continue to limit the bullish attempts in the pound. A lack of any encouraging on the UK political front, with candidates Liz Truss and Rishi Sunak battling out the leadership race. Ahead of next week’s BOE rate decision, money markets suggest a bold 50 bps than a conservative 25 bps increase. However, economists are much less certain, with 25 out of 54 polled by Reuters expecting a half-point hike, according to the latest Reuters poll.

Friday’s CFTC data showed IMM speculators reduced their GBP exposure by 10% in the fortnight to July 19, with gross GBP longs cut by 7,675 contracts to 33,850, per Reuters. The pair now awaits the US Durable Goods Orders and New Home Sales data. The main event risk for this week, however, remains the FOMC decision due on Wednesday.

Looking at the cable’s daily chart, the pair closed Monday above the bearish 21-Daily Moving Average (DMA), then at 1.2006.

Although with the 14-day Relative Strength Index (RSI) lurking below the midline, sellers have returned and look to retest the 21 DMA resistance turned support, now at 1.1997.

A sustained break below the latter will expose Monday’s low of 1.1960, below which a test of the 1.1900 level will be inevitable.

On the flip side, if bulls manage to defend the 21 DMA, then a fresh advance towards the descending 50 DMA at 1.2238 cannot be ruled out.

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UK Preliminary Services PMI drops to 53.3 in July vs. 53.0 expected

UK Manufacturing PMI eases to 52.2 in July, beats estimates.

Services PMI in the UK comes in at 53.3 in July, better than forecasts. 

GBP/USD keeps the rebound intact at around 1.2050 on upbeat UK PMIs.

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) dropped to 52.2 in July versus 52.0 expected and 52.8 – June’s final reading.

Meanwhile, the Preliminary UK Services Business Activity Index for July arrived at 53.3 when compared to June’s final score of 54.3 and 53.0 expected.

Chris Williamson, Chief Business Economist at S&P Global, commented on the survey

“UK economic growth slowed to a crawl in July, registering the slowest expansion since the lockdowns of early-2021. Although not yet in decline, with pent-up demand for vehicles and consumer-oriented services such as travel and tourism helping to sustain growth in July, the PMI is now at a level consistent with just 0.2% GDP growth.“

“Forward-looking indicators suggest worse is to come. Manufacturing order books are now deteriorating for the first time in one and a half years as inflows of new work are insufficient to keep workforces busy, which is usually a precursor to output and jobs being cut in coming months."

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