- The Pound Sterling underperforms its peers as the preliminary UK PMI unexpectedly contracted in April.
- Trump is confident of closing bilateral deals with various nations soon.
- Investors await the preliminary US PMI data for April.
The Pound Sterling (GBP) weakens against most of its peers on Wednesday after the release of poor preliminary S&P Global/CIPS Purchasing Managers’ Index (PMI) data for April. The PMI report has shown that the overall business activity unexpectedly contracted due to a sharp decline in the services sector. A figure below the 50.0 threshold is considered a contraction in business activities. The Composite PMI is down at 48.2 against estimates of 50.4 and the March reading of 51.5, the first decline since October 2023.
The Service PMI contracts to 48.9 from expectations of 51.3 from 52.5 in March. The PMI report has indicated that rising global economic uncertainty and subdued domestic demand conditions were the main factors weighing on output. Meanwhile, the Manufacturing PMI has contracted again at a faster pace to 44.0, as expected, against the former reading of 44.9.
The agency is also pessimistic over business activity expectations considerably in both the manufacturing and service sectors, with overall confidence levels the lowest for two and a half years. According to the report, respondents mostly attributed weaker business sentiment to heightened recession risks at home and abroad. Many firms reported a negative impact on growth projections from US trade tensions, rising geopolitical uncertainty, and general worries about the broader UK business climate.
This week, investors will also focus on the United Kingdom (UK) Retail Sales data for March, which will be released on Friday. The Retail Sales data, a key measure of consumer spending, is estimated to have declined by 0.4% month-on-month after rising by 1% in February.
On the monetary policy front, market participants are confident that the Bank of England (BoE) could reduce interest rates in the May policy meeting. Traders have become increasingly confident about an interest rate reduction next month due to slower-than-expected growth in the Consumer Price Index (CPI) data for March and the uncertainty over the global economic outlook.
Additionally, slowing UK wage growth is also paving the way for further monetary policy easing. Britain’s human resources data firm Brightmine showed on Tuesday that pay awards rose by 3% for the fourth rolling quarter in a row, which is the slowest increase since December 2021.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | 0.17% | 0.31% | 0.00% | -0.74% | -0.39% | 0.54% | |
| EUR | -0.14% | 0.02% | 0.10% | -0.14% | -0.82% | -0.54% | 0.39% | |
| GBP | -0.17% | -0.02% | 0.09% | -0.16% | -0.85% | -0.56% | 0.39% | |
| JPY | -0.31% | -0.10% | -0.09% | -0.25% | -0.89% | -0.67% | 0.30% | |
| CAD | -0.00% | 0.14% | 0.16% | 0.25% | -0.64% | -0.37% | 0.56% | |
| AUD | 0.74% | 0.82% | 0.85% | 0.89% | 0.64% | 0.30% | 1.26% | |
| NZD | 0.39% | 0.54% | 0.56% | 0.67% | 0.37% | -0.30% | 0.96% | |
| CHF | -0.54% | -0.39% | -0.39% | -0.30% | -0.56% | -1.26% | -0.96% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily digest market movers: Pound Sterling pares initial losses against US Dollar
- The Pound Sterling recovers its entire initial losses against the US Dollar (USD) and flattens around 1.3300 in Wednesday’s European session. The GBP/USD pair pares intraday losses as the US Dollar (USD) gives up its gains made earlier in the day. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls back to near 99.00 but is still holding its three-year low of 98.00.
- The US Dollar surrenders gains despite optimism over de-escalation in the United States (US)-China trade war and diminishing fears of President Donald Trump sacking Federal Reserve (Fed) Chair Jerome Powell for not lowering interest rates.
- While addressing reporters at the Oval Office on Tuesday, Donald Trump highlighted a “sharp reduction in trade deficits” and “rising revenue” generated from the imposition of tariffs on foreign cars, aluminium, and steel. Trump expressed confidence that his administration is negotiating deals with several countries, which will be effective soon. On the current situation with China, Trump commented that “discussions with Beijing are going well”. The President added that he thinks “they will reach a deal”. Trump further added that tariffs on China would not be as high as “145%, but they wouldn’t be zero”.
- Moreover, President Trump pushed back fears of removing Jerome Powell despite criticizing him for not supporting monetary policy expansion. “The press runs away with things. No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates.”
- In the last few trading sessions, investors were punishing the US Dollar and US assets due to Trump’s assault on the Fed’s independence and ever-changing headlines on trade policies. Market participants started doubting the safe-haven status of the US Dollar.
- In North American trading hours, investors will focus on the flash US S&P Global PMI data for April.
Technical Analysis: Pound Sterling retraces to near 1.3300
The Pound Sterling corrects to near 1.3300 against the US Dollar after visiting a three-year high around 1.3430 the previous day. However, the outlook of the pair remains firm as all short-to-long Exponential Moving Averages (EMAs) are sloping higher.
The 14-day Relative Strength Index (RSI) cools down slightly after reaching overbought levels above 70.00. This indicates a mild correction in the pair after a strong rally, but the upside trend is intact.
On the upside, the psychological level of 1.3500 will be a key hurdle for the pair. Looking down, the April 3 high around 1.3200 will act as a major support area.
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