GBP/USD moves up, nearing 1.3800 as the US Dollar hits long-term lows.

Pound Hits Four-Year High Amid Mixed Economic Signals

Pound appreciates to nearly 1.3800

UK manufacturing PMI remains at 47.7, with declines in new orders and employment

Concerns over US debt and Trump’s criticism of the Fed are impacting the dollar

The pound surged on Tuesday, largely ignoring the dismal manufacturing PMI data from the UK. Instead, the decline of the US dollar played a significant role, influenced by tariff uncertainties, worries about US fiscal stability, and growing speculation about the Federal Reserve’s actions, which are diminishing demand for the dollar.

Manufacturing activity in the UK held steady at 47.7 for June. However, a drop in new orders, employment figures, and production compared to last month suggests potential for further economic contraction ahead.

Dollar Under Pressure from US Debt Concerns and Fed Cuts

Despite the lackluster economic figures, Sterling has managed to gain, increasing nearly 0.4% and reaching its highest point at 1.3790, a peak unseen since October 2021.

There are ongoing worries about Trump’s proposed financial legislation affecting the US’s economic health as it faces a lengthy Senate voting process, which, in turn, could have implications for the strength of the dollar.

Trump’s ongoing critique of Fed Chairman Powell centers around calls for lower interest rates, with hopes that there will be easing in monetary policy a couple of times later this year. Powell is expected to discuss the Fed’s monetary policy strategy at the Central Bankers Summit today.

GBP/USD: Key Resistance at 1.3800 – UOB Group

The FX Strategy Team at UOB Group is optimistic about the GBP/USD outlook. Their technical analysis indicates a critical resistance at 1.3800. They expressed a favorable stance last Thursday, noting that while the outlook remains positive, there might be a brief consolidation phase. They aim for this technical target, unless the significant support level around 1.3645 is breached.

Economic Indicators

S&P Global Manufacturing PMI

The Manufacturing Purchase Manager Index (PMI) is released monthly and serves as a crucial indicator of business activity within the UK manufacturing sector. It is based on a survey of senior executives. The index scales from 0 to 100, where 50.0 indicates no change from the previous month. Figures above 50 signal expansion, while those below suggest contraction, impacting the pound’s strength.