Pound falls amid volatile trading ahead of the S&P Global Services PMI report.
Despite a continuous sell-off over the last three months. The Pound Sterling (GBP) is struggling to find a strong foundation.
The UK’s Services PMI is expected to fall for the second time in a row.
The GBPUSD pair is facing a brutal sell-off as the UK economy struggles against headwinds such as dismal growth outlook. And sticky inflation. UK inflation is more than three times the target rate of 2%, and the Bank of England (BoE) is hesitant to raise interest rates. Further owing to rising recession concerns. Following a more than year-long drop in the Manufacturing PMI. The UK’s Services PMI is expected to remain below the 50.0 mark for the second time in a row. Due of sluggish demand. British manufacturers have reduced new orders and manpower. Rising oil costs and supply chain disruptions might further harm the UK economy.
Daily Market Movers: The pound sterling falls further ahead of the Services PMI report.
The pound fails to hold the important support level of 1.2050. Ahead of the release of September Services PMI data at 8:30 GMT.
The Services PMI is expected to remain steady at 47.2. This would be the second consecutive month of service activity reduction. The graph belowA contraction is indicated by a value of 50.0.
Higher interest rates are regularly wreaking havoc on UK economic activity. Firms appear to be completely negative about the economic prospects. Owing to diminishing local and international demand.
The UK Manufacturing PMI fell for the 14th time in a row this week, as businesses reduced production, new orders, and employment amid weakening demand.
While the UK economy struggles to find its footing as a result of economic instability, rising inflation remains a concern for Bank of England officials despite lifting interest rates to 5.25%.
The majority of BoE officials prefer keeping interest rates steady in September, but Katherine Mann believes monetary policy is insufficiently tight to keep inflation at 2%.
BoE Mann went on to sayPolicymakers face a “world where inflation shocks are likely to be more frequent” with faster price increases, implying that interest rates will need to be permanently higher.
UK’s economic outlook and sticky inflation.
In the middle of all the negativity surrounding the UK’s economic outlook and sticky inflation, the British Retail Consortium (BRC) stated that food price inflation declined for the fifth month in a row to a single-digit annualized rate of 9.9% from 11.5%.
BRC Chief Executive Helen Dickinson stated that she expects shop price inflation to continue to reduce for the remainder of the year, but she cautioned that rising oil costs, a worldwide sugar scarcity, and supply bottlenecks caused by the Ukraine crisis might hamper the trend.
On global trade, Business and Trade Minister Kemi Badenoch stated at the Conservative Party Conference. According to Reuters, President Joe Biden’s government has “zero” chance of reaching a free trade agreement with the United States.
Meanwhile, the market remains calm as investors await ADP’s release of US Employment Change data at 12:15 GMT. According to the consensus, private payrolls will rise by 153K in September, down from 177K in August.
The September labor market statistics in the United States will influence the Federal Reserve’s (Fed) November monetary policy.
The US Dollar Index (DXY) is trading at 107.20, with the prospects of another Fed rate hike.
The US Dollar Index (DXY) is trading at 107.20, with another Fed rate hike increasing following hawkish comments from Cleveland Fed Bank President Loretta Mester and Fed Governor Michelle Bowman.
In the month of August, The US JOLTS Job Openings report remained positive. Employers advertised 9.61 million job openings, compared to 8.8 million expected.
