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GBP/USD touches 1.28 on stellar UK PMI release

currency-newsGBP/USD touches 1.28 on stellar UK PMI release
The pound pushed higher on Friday, climbing to a fresh multi-month high against the US dollar on the back of some strong UK PMI figures.

Sterling appears to have stabilised this morning, however, with GBP/EUR rangebound at €1.0956 and GBP/USD climbing to $1.2809. GBP/CAD is flat at C$1.7165, while GBP/AUD and GBP/NZD are holding steady at AU$1.7983 and NZ$1.9227, respectively.

Coming up this week, we expect Q2 GDP releases from the US and Eurozone to be at the top of the agenda.

What’s been happening?

The pound struck higher at the end of last week, recapturing some of its recent Brexit driven losses in response to the UK’s latest PMI release.

July’s preliminary figures highlighted the private sector’s strong return to form last month, with economic activity surging to a five-month high as the UK continued to ease its lockdown measures.

Adding to the upside in Sterling was a record jump in the UK’s retail sales in data published at the start of the session.

The euro also benefitted from a strong PMI release on Friday, with a stronger-than-expected reading bolstering hopes for a V-shaped recovery in the Eurozone through the second half of 2020.

The US dollar, meanwhile, stumbled at the end of last week’s session. While flaring tensions between the US and China provided some modest support to the safe-haven ‘Greenback’, this failed to offset some weaker-than-expected PMI figures from the US.

What’s coming up?

Turning to this week’s session, the spotlight will be on the latest GDP estimates from the US and Eurozone.

These will provide investors with a clear look at how both economies fared during the second quarter, with a significant plunge in growth in both regions likely to infuse the US dollar and euro with volatility this week.

In the meantime, however, the publication of the latest US durable goods figures later this afternoon may provide some much-needed support to the US dollar at the start of the session if orders rose in line with expectations.

Germany’s business climate index is also released today, which may allow the euro to extend its gains this morning if business sentiment improved in July.

Finally, in the absence of any notable UK economic releases this week, the focus for GBP investors is likely to remain on Brexit, potentially hamstringing the pound so long as talks remain deadlocked.
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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