Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
GBP/USD Price Outlook: Unfazed by PMI Warning Signal

GBP/USD Price Outlook: Unfazed by PMI Warning Signal

Justin McQueen, Strategist

GBP/USD Analysis & Talking Points

  • UK Service Sector Contracts
  • Political Uncertainty Typically Overstates Economic Weakness

Today’s UK Services PMI rounded a hat-trick of contractionary readings, resulting in the all sector PMI posting its first back to back contraction since 2012. Alongside this, IHS Markit highlighted that at current levels point to GDP falling by 0.1% in Q3, which if indeed was the case, the UK would slip into a technical recession. That said, the PMI surveys have typically overstated the weakness of the economy during times of heightened political uncertainty.

However, one of the more concerning highlights within the report had been the weakness in employment with IHS Markit noting that the services sector saw the biggest reduction in employment since 2010, therefore reinforcing the Bank of England’s view that “the labour market does not appear to be tightening further, with official and survey measures of employment growth softening”.

GBP/USD Price Outlook: Unfazed by PMI Warning Signal

In reaction the PMI miss, the Pound initial dipped, however, the move was relatively contained given that politics remains the key driver for the Pound at the current stage. As such, following PM Johnson’s Brexit proposals to the EU, focus will be on the response from the EU as well as Ireland.

GBPUSD PRICE CHART: 1-MINUTE TIME FRAME (INTRADAY)

GBP/USD Price Outlook: Unfazed by PMI Warning Signal

For a more in-depth analysis on FX, check out the Q3 FX Forecast

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES