The Pound Sterling fell against major currencies after the UK S&P Purchasing Managers’ Index (PMI) report for July showed slower business growth than expected. The Composite PMI was 51.0, below the forecast of 51.9, indicating only moderate growth. Activity in the service sector grew slightly, as the Services PMI dropped to 51.2 from an expected 53.0, down from 52.8 previously. Meanwhile, manufacturing continued to decline, reporting a PMI of 48.2. Although this was better than expected, it was still lower than earlier figures, primarily due to global trade uncertainties and recent policy changes.

GBP/USD Trends

In the GBP/USD market, the pair was around 1.3550 after losing early-week gains, influenced by US PMI data and market reactions to a potential US-Japan trade deal. This pair has rallied nearly 14% this year. For GBP/USD to maintain its positive trend, it must break through resistance at 1.3635. A rise to 1.3787 could lead to a move toward 1.3900, with further targets at 1.4070 and possibly reaching the psychological level of 1.4200. However, market conditions and future statements involve risks and uncertainties, so investors should proceed with caution. The Pound Sterling has reacted sensitively to the recent UK S&P PMI report. The Composite PMI hit 53.0 in May, showing a slight decrease from April’s peak but still indicating the second-fastest growth in a year. This points to economic expansion that, while still robust, could be losing momentum—a significant signal. Service sector activity, although strong at 52.9, shows a slight dip, which is important given its leading role in the UK economy. In contrast, the manufacturing sector demonstrated resilience, with its PMI rising to 51.2, the best performance in nearly two years. This difference between the sectors adds complexity to the overall outlook for the currency.

Market Sentiment and Risk Management

Currently trading around 1.2750 in the GBP/USD market, this mixed data calls for a cautious strategy. Buying call options might be a smart approach to capture possible gains while reducing risk from any sudden weakness in the pound. The uncertainty about the Bank of England’s first interest rate cut should support implied volatility, making options appealing. To keep the positive momentum going, GBP/USD needs to break through the 1.2800 resistance point decisively. Sustained movement above this level could target the year-to-date high near 1.2890. Historically, since early 2023, the 1.2850-1.2900 range has been a significant barrier for the currency pair. Market sentiment will also be strongly affected by upcoming US data and signals from the Federal Reserve. Recent US inflation figures have been mixed, affecting the dollar’s strength against the pound. These factors highlight the importance of careful positioning and risk management in the coming weeks. Create your live VT Markets account and start trading now.

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