GBP/USD drops sharply while USD Index rebounds

Pound Sterling dips as geopolitical tensions shrink risk appetite

The Pound Sterling (GBP) comes under pressure in Thursday’s early New York session due to Middle East tensions and mixed preliminary PMIs reported by the S&P Global/CIPS for February. The Manufacturing PMI at 47.1 was slightly above the prior reading of 47.0 but failed to match expectations of 47.5. The Services PMI was surprisingly unchanged at 54.3, while investors anticipated a decline to 54.1. The Composite PMI was higher at 53.3 against expectations and the former reading of 52.9.

The GBP/USD pair falls on backfoot as Bank of England (BoE) policymaker Swati Dhingra cautioned about downside risks to the United Kingdom economy due to high interest rates. In her speech at the Market News International Connect event on Wednesday, Dhingra said the demand prospects are “weak and less resilient” than their previous forecasts. She added that higher mortgage costs and rental prices in 2023 shortened households’ pockets, which resulted in weak Retail Sales. Read more…

The uptrend in the Eurozone PMI is unlikely to give the Euro a boost – SocGen

Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes the FX market outlook after the release of the February flash PMIs from around the world. Read more…