The Next Test for GBP/USD Buyers as It Creeps Higher on Better UK Services
GBP/USD has maintained its positive momentum today, pushing to 1.2570s in the European session after better UK PMI figures, although it has retreated lower now and it’s trading around the 1.2540 region during Thursday’s US session, just shy of its best level since September 6.
GBP/USD was testing the 100 SMA (green) on the daily chart earlier this week, but retraced lower after buyers failed to break above this moving average. Now, this forex pair is retesting the same moving average and it pierced above earlier, but the price has retreated below it again, so let’s see.
Buyers resumed control again after the improvement in the UK manufacturing PMI indicator for November, although this sector still remains in contraction. Services on the other hand, left contraction behind and this month the activity in this sector is expanding again after contracting for three months.
UK Flash Services PMI for November
- November flash services PMI 50.5 points vs 49.5 expected
- October flash services PMI 49.5 points
- Manufacturing PMI 46.7 points vs 45.0 expected
- Prior manufacturing PMI was 44.8 points
- Composite PMI 50.1 points vs 48.7 expected
- Prior composite PMI was 48.7 points
UK business activity shows a marginal growth in November, the first in three months, as both services and manufacturing sector activity picked up on the month. That’s a welcome development for the economy in general, although there were renewed signs of inflation being more stubborn. S&P Global notes that:
“The UK economy found its feet again in November as the service sector arrested a three-month sequence of decline and manufacturers began to report less severe cutbacks to production schedules. Relief at the pause in interest rate hikes and a clear slowdown in headline measures of inflation are helping to support business activity, although the latest survey data merely suggests broadly flat UK GDP in the final quarter of 2023
Prominently cited areas of strength were corporate budgets for technology investment and general spending on essential business services. Discretionary household spending remained a weak link, as many private sector businesses noted low consumer confidence and cost-of-living pressures. Meanwhile, a number of firms reported falling demand due to construction sector cutbacks and post-pandemic customer destocking was still a headwind for the manufacturing sector.
The survey’s forward-looking indicators suggested that recession risks will likely remain elevated into the New Year, as new orders decreased for the fifth month running amid ongoing reports of subdued sales opportunities. At the same time, business activity expectations held close to October’s recent low and remained notably soft in comparison to the first half of 2023.
Finally, overall input cost pressures picked up for the first time in four months. Service sector inflation was a key area of concern as businesses once again reported the need to pass on higher staff costs to customers. Measured overall, prices charged by UK private sector firms increased at the fastest pace since July, led by a robust and accelerated rise among service providers.”
GBP/USD Live Chart
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