The British pound started the new trading week in positive territory. GBP / USD is trading at 1.3672, up 0.37% on the day.
Stellar manufacturing but services are slipping
UK Flash PMI reports for August were mixed. The manufacturing PMI edged down to 60.1 (July end: 60.4). Although a 5-month low, this reading indicates strong expansion as it is well above the neutral level of 50. Consumer demand remains strong, but manufacturers are struggling to keep up due to material shortages. raw.
News was not as good from the service sectors, which slipped to 55.3, a 6-month low (final July: 59.6). The sharp slowdown was a reflection of supply chain issues and staff shortages. As with manufacturing, companies have been unable to meet customer demand, resulting in backlogs. However, even with this slowdown, commercial activity remains largely in expansionary territory. Meanwhile, the CBI survey of manufacturers’ economic expectations, which had been in negative territory for some 24 months, recorded its fourth consecutive month of expansion. This is another indication of a robust manufacturing sector.
The British pound started the week off on the right foot, with PMIs continuing to point to expansion. In addition, the markets are in risk mode, which slowed the dollar’s rally that we saw last week.
The Federal Reserve will remain in the spotlight this week, with Jerome Powell delivering a highly anticipated speech Friday at the Jackson Hole Symposium. As the delta variant of Covid continues to grab headlines and make investors nervous, Powell may choose to deliver a conciliatory message regarding the reduction. Investors are responding by buying treasury bills and tech stocks. If Powell’s speech is conciliatory, Jackson Hole could end up being a negative market driver for the US dollar.
GBP / USD technical analysis
- GBP / USD is facing resistance at 1.3800. Above there is resistance at 1.3977
- On the downside, 1.3659 is the first support line. This is followed by support at 1.3524