The British pound (GBP) slipped on Tuesday after reaching a peak of 1.3567 earlier in the day. This happened even as the US dollar (USD) recovered, despite some underwhelming Purchasing Managers’ Index (PMI) figures and comments from Federal Reserve officials who maintained a neutral stance. At the moment, GBP/USD is trading at 1.3519, down 0.15%.
GBP Pulls Back from Daily Highs as Stability Returns
Recent data from S&P Global indicates that while the U.S. economy is slowing down, it’s doing so only gradually. The services PMI for December fell to 52.5 from 52.9 in November, and the composite PMI also dipped, showing a drop to 52.7 from the previous month’s 53.
Richmond Fed President Thomas Barkin mentioned that upcoming interest rate decisions might need some “tweaks,” citing concerns over unemployment and inflation targets. He noted that the current rates are in the neutral zone and both policy sides need examination.
Earlier remarks from Fed Governor Stephen Milan suggested a dovish outlook, as he predicted potential rate cuts, projecting a decrease of 100 basis points by 2026 if data supports it.
Given this context, a slight weakening of the US dollar was anticipated, but losses from Monday have moderated somewhat. The dollar index (DXY), which compares the USD to six other currencies, increased by 0.25% to 98.61.
On the UK side, December’s S&P Global Services PMI recorded 51.4, a minor rise from November’s 51.3. Insights from the report indicate that inflation pressures in the services sector grew more intense at the year’s end, as input prices saw their most significant rise in seven months, which might complicate the Bank of England’s easing strategy set for 2026.
No major UK economic reports are scheduled for release this week. U.S. traders will be eyeing changes in ADP employment, the December ISM Services PMI, JOLTS job data, and comments from Fed officials.
GBP/USD Technical Outlook
From a technical standpoint, GBP/USD seems likely to continue its fall, though the overall trend remains bullish. The inability of buyers to surpass the 1.3600 mark has intensified the current retreat toward 1.3500. If that level breaks, it could lead to a test of the key 200-day simple moving average (SMA) support around 1.3385. If prices stay above 1.3500, however, bulls might push the currency pair past the 1.3580 threshold.
