Pound Sterling extends gains on UK’s stronger economic outlook, weakening US dollar.

The Pound Sterling (GBP) hopes to extend its rebound above the one-week high of 1.2660 in Thursday’s early New York session. The GBPUSD pair is strong as recent economic indicators in the United Kingdom show that the economy is on pace to resume growth after entering a technical recession in the second half of 2023. Meanwhile, a lower US dollar owing to the dismal United States Institute of Supply Management (ISM) Services PMI data for March also helped the Cable.

The UK’s strong Manufacturing PMI numbers and rising property prices indicate that the recession was mild.

The UK Manufacturing PMI unexpectedly increased in March after declining for 20 consecutive months, owing to strong domestic demand. Strong UK factory statistics boosted company optimism to its highest level since April 2023, with 58% of firms expected to raise production over the next 12 months. In addition, British house prices climbed 1.6% in March, the fastest rate since December 2022, indicating that the real estate sector is holding up despite record high interest rates.

In the European session, the latest Bank of England (BoE) Decision Maker Panel (DMP) survey for February revealed that most enterprises expect selling prices and wage inflation to fall over the next year. Selling price expectations slowed to The reading fell from 4.3% to 4.1%, the lowest in more than two years. Wage growth forecasts fell to 4.9% on a three-month moving average, from 5.2% in February.

Daily Market movers: Pound Sterling extends winning streak.

The Pound Sterling rises to 1.2660 against the US dollar. The asset’s gains continue as market confidence improves and the US Dollar falls due to a dismal ISM Services PMI. Thursday’s session begins on a bullish note for the S&P 500.
On Wednesday, the US Services PMI unexpectedly dipped to 51.4 in March, compared to estimates of 52.7 and a previous reading of 52.6. The Services PMI measures business activity in the service sector, which makes up two-thirds of the US economy. So, the influence of A poor Services PMI was highly negative for the US dollar, sending the US Dollar Index (DXY) down more than 0.5% to 104.15. According to the ISM report, the subindexes for new orders and prices paid declined sharply.

The US NFP report will determine the next move in the US dollar.

This week’s key driver for the US Dollar will be the March US Nonfarm Payrolls (NFP) report. Which will be released on Friday. The economic data will have a big impact on market expectations for whether the Federal Reserve will begin lowering interest rates following the June meeting. The NFP report is projected to reveal that 200K workers were employed during the month, a decrease from February’s reading of 275K.
On the UK front, the Pound Sterling will be influenced by market expectations for Bank of England rate cuts. Investors Expect the Bank of England to begin the rate-cutting cycle in June, as UK inflation continues to drop. For the entire year, BoE Governor Andrew Bailey believes two or three rate cuts are “reasonable.”
Meanwhile, S&P Global/CIPS announced that Services PMI did not reach expectations in March. The Services PMI falls to 53.1, compared to expectations and the previous figure of 53.4. Tim Moore, Economics Director at S&P Global Market Intelligence, stated, “The recovery in service sector output lost a little bit of impetus in March, more so than implied by the flash PMI figures, but the overall picture remains pretty encouraging.