British Pound (GBP) Price Outlook: GBP/USD to Benefit from UK PMIs
GBP price, news and analysis:
- UK employment growth hit a record high in June, amid sharply rising workloads, and inflationary pressures also strengthened, according to the latest UK purchasing managers’ indexes.
- That’s positive for GBP/USD, which could touch 1.40 ahead of or soon after Thursday’s monetary policy announcement by the Bank of England.
GBP/USD outlook positive
GBP/USD is unlikely to move far ahead of Thursday’s monetary policy announcement by the Bank of England but the near-term outlook remains broadly positive and the pair looks to be heading towards 1.40 before, or perhaps soon after, the Bank’s monetary policy committee concludes its meeting.
That broadly positive outlook has been bolstered by the latest UK purchasing managers’ indexes. “June saw further strong growth in output across the UK private sector… The overall expansion in activity was only slightly slower than the record posted in May and among the fastest since the series began in January 1998,” commented IHS Markit and CIPS, which compile the data. “Marked increases in output were seen across both the manufacturing and service sectors as the economy continued to reopen following the Covid-19 lockdown earlier in the year,” they added.
UK PMIs for June
Source: DailyFX calendar (You can click on it for a larger image)
Bank of England to warn on UK inflation?
The statistics add to the pressures on the Bank’s monetary policy committee to wind down its stimulus measures – a positive for GBP – although that remains far away. In the meantime, the focus Thursday will be on whether the Bank warns about the latest increase in UK inflation and, if it does, that too will be positive for Sterling as analysts consider the possibility of a tightening of monetary policy earlier than currently expected.
GBP/USD Price Chart, One-Hour Timeframe (June 11-23, 2021)
Source: IG (You can click on it for a larger image)
--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.