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GBP/USD rallies back above $1.35 on upbeat UK manufacturing PMI

currency-newsGBP/USD rallies back above $1.35 on upbeat UK manufacturing PMI
The pound mounted a convincing recovery on Friday, aided by a stronger-than-expected manufacturing PMI and an improving market mood.

Sterling is steady this morning, with GBP/EUR subdued at €1.1678 and GBP/USD flat at $1.3544. GBP/CAD is slightly lower at CA$1.7123, while GBP/AUD and GBP/NZD hold steady at AU$1.8674 and NZ$1.9533, respectively.

Coming up, will an upbeat US factory order report help propel the US dollar higher this afternoon?

What’s been happening?

The pound closed last week’s session on a positive note, with the currency able to recoup a good portion of its losses from earlier in the session.

This uptick in Sterling appeared to be partly driven by the UK’s latest manufacturing PMI as September’s finalised index was revised higher, with further support coming courtesy of optimism over the UK’s coronavirus situation, as low hospitalisations will hopefully prevent another lockdown.

The US dollar, meanwhile, faced some notable selling pressure on Friday as the start of the new month brought with it a more upbeat mood, which dampened demand for the safe-haven currency.

Capping these losses, however, was the publication of the ISM manufacturing PMI, after the index printed at a four-month high in September.

This downturn in the US dollar helped to prop up demand for the euro at the end of last week, thanks to the strong negative correlation between the pairing, although concerns over another above forecast rise in inflation in the Eurozone - in light of the European Central Bank’s (ECB) reluctance to start tightening monetary policy - did temper the single currency’s gains.

What’s coming up?

Turning to the upcoming session, the only notable data release at the start of the week will be the publication of the latest US factory order figures, which could provide some modest support to the US dollar this afternoon, if it prints positively.

In the absence of any notable GBP data, the pound is likely to remain sensitive to headlines pertaining to the UK’s economic outlook, with Sterling vulnerable to losses if the recent doom and gloom persists.

Meanwhile, the focus for EUR investors this week is likely to be on Germany’s latest industrial data, with the euro likely to slump if activity in Germany’s most vital sector slowed in August.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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