Pound Sterling juggles over 1.2700 following a V-shaped rebound fueled by risk-on market sentiment.

The Pound Sterling (GBP) has lost its direction following a strong rebound move. As optimistic market sentiment offsets the impact of fragile British PMIs released by S&P Global on Wednesday. According to the agency, manufacturing activity was at its lowest since the pandemic period. As enterprises underused their working capacity owing to a poor market forecast.

Fears of a UK recession grow as the Bank of England warns of increased corporate default risks.

Fears of a UK recession increased on Wednesday, as officials at the Bank of England (BoE) warned of large upside risks to the economy. Corporate defaults increased following the release of susceptible PMIs. Investors are betting on a lower interest rate peak as recession concerns grow. According to a Reuters poll, the Bank of England may suspend the rate-tightening cycle. Following an interest rate rise in September.

The Pound Sterling consolidates ahead of the Jackson Hole Symposium. According to the Daily Digest Market Movers.

As market sentiment remains strong, the pound sterling consolidates above the round-level support of 1.2700 following a V-shaped rebound.

The Pound Sterling resilience indicates that markets are disregarding the shaky UK preliminary PMI readings for August, released on Wednesday by S&P Global.

According to S&P Global, the UK Manufacturing PMI fell sharply to 42.5 from 45.0 expected and 45.3 in July. This is the lowest factory data statistic since records began. Corporate defaults increased following the release of susceptible PMIs. Investors are betting on a lower interest rate peak as recession concerns grow. According to a Reuters poll, the Bank of England may suspend the rate-tightening cycle following an interest rate rise in September. pandemic time and highlights the impact of the Bank of England raising interest rates.

The Services PMI has entered the contraction phase, falling below the 50.0 mark. The economic statistics came in at 48.7, below predictions of 50.8. And the previous month’s release of 51.3.

On Tuesday, Bank of England officials cautioned of potential upside risks to corporate defaults. As interest rates rise. The Bank of England’s current tightening cycle is aggressive. Given the UK has the highest inflation rate among industrialized countries.

According to a Bank of England poll, the proportion of non financial UK enterprises with a poor debt-service coverage ratio will grow to 50% by the end of the year, up from 45% last year.

Consistently falling manufacturing PMI suggests that UK enterprises are not functioning at full capacity as a result ofa bad economic outlook.

Falling PMIs have heightened concerns about the UK economy entering a recession. As a result, traders are betting on a lower interest rate peak.

According to a Reuters poll, the Bank of England will raise interest rates by 25 basis points (bps) to 5.50% on September 21. A small group of experts believe interest rates will rise even more.

Significant downside risks to corporate default and weak PMIs are projected to force the UK economy into recession sooner. But officials at the Bank of England appear powerless and unable to resist hiking interest rates. As price pressures exceed the intended rate of 2%.

Pound sterling investors are looking forward to the Jackson Hole Symposium for further information.

The market went positive when the preliminary PMI for the United States stayed lower than expected. Signaling that the economy is still struggling. is losing its tenacity.

The market may become more cautious as the Jackson Hole Symposium begins on Thursday. Fed Chair Jerome Powell is slated to give an update on inflation, interest rates, and the economy.

After a sell off move ahead of the Jackson Hole summit, the US Dollar Index (DXY) swings sideways around 103.30. Aside from that. Investors will be paying close attention to the Durable Goods Orders data.

Former St. Louis Fed President James Bullard stated on Tuesday. That the United States’ economy faced new dangers from faster growth. This might need higher interest rates from the central bank. In order to maintain the fight against inflation.