United Kingdom (UK) S&P Global Composite Purchasing Managers’ Index (PMI) unexpectedly expands at a faster pace to 52.0 in April, according to flash estimates, due to a significant growth in both manufacturing and the services sector activity. Economists expected the overall business activity to have dropped to 49.8 from the previous reading of 50.3.
The Manufacturing PMI arrives at 53.6, while it was expected to come in lower at 49.9 from 51.0 in March. The Services PMI jumps to 52.0 vs. 50.0 estimate and the previous reading of 50.5.
“The UK economy has gathered some renewed momentum in April after the initial impact of the war in the Middle East caused growth to stall in March, but the upturn comes with a catch. The improved rate of expansion is in part a reflection of a short-term boost from a rush to secure purchases ahead of feared price rises and supply shortages linked to the war,” Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said.
Market reaction
The Pound Sterling (GBP) attracts significant bids against its peers after the UK’s preliminary PMI data release. As of writing, GBP/USD turns flat around 1.3500 after recovering early losses.
Pound Sterling 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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | 0.02% | 0.13% | -0.06% | 0.11% | 0.26% | -0.04% | |
| EUR | -0.06% | -0.02% | 0.06% | -0.12% | 0.02% | 0.20% | -0.12% | |
| GBP | -0.02% | 0.02% | 0.11% | -0.10% | 0.07% | 0.23% | -0.09% | |
| JPY | -0.13% | -0.06% | -0.11% | -0.19% | -0.01% | 0.12% | -0.17% | |
| CAD | 0.06% | 0.12% | 0.10% | 0.19% | 0.19% | 0.32% | 0.00% | |
| AUD | -0.11% | -0.02% | -0.07% | 0.00% | -0.19% | 0.17% | -0.18% | |
| NZD | -0.26% | -0.20% | -0.23% | -0.12% | -0.32% | -0.17% | -0.33% | |
| CHF | 0.04% | 0.12% | 0.09% | 0.17% | -0.01% | 0.18% | 0.33% |
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).
(This section below was published at 06:47 GMT as a preview of the flash UK PMI data for April)
The UK Services PMI Overview
The United Kingdom (UK) docket has the preliminary Purchasing Managers’ Index (PMI) data for April to be released by the S&P Global on Thursday, later in the day at 08:30 GMT.
S&P Global Services PMI is expected to come in at 50.0 in April, inching down from 50.5 recorded in the previous month.
How could it affect GBP/USD?
GBP/USD may remain subdued as the S&P Global Services PMI is expected to decline in April, along with Composite and Manufacturing PMIs. The Pound Sterling (GBP) struggles amid persistent risk aversion linked to Middle East concerns. Traders will shift their focus toward the UK Retail Sales data due on Friday.
The GBP/USD pair also declines as the US Dollar gains ground amid rising energy prices, which have intensified inflation concerns and reduced expectations for Federal Reserve (Fed) rate cuts. A recent Reuters survey of economists showed that 56 out of 103 respondents expect the Fed to keep its policy rate within the current 3.5%–3.75% range at least through September.
Technically, the GBP/USD pair holds a constructive bullish bias as it stays marginally above the nine-period Exponential Moving Average (EMA) and comfortably over the 50-period EMA. The initial barrier lies at the two-month high of 1.3599, recorded on April 17. On the downside, the pair is testing the immediate support at the nine-day EMA of 1.3492, followed by the 50-day EMA at 1.3427.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data.
Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates.
When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP.
A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Source: https://www.fxstreet.com/news/when-is-the-uk-services-pmi-and-how-could-it-affect-gbp-usd-202604230647
