The preliminary data suggests that the UK’s headline PMI saw an increase, jumping from 51.4 in December to 53.9 in January, which was higher than the anticipated figure of 51.7. This indicates a notable rise in overall business activity, driven by strong growth in both the manufacturing and service sectors.
The Services PMI came in at 54.3, exceeding the predicted 51.7 and the earlier figure of 51.4. Meanwhile, the Manufacturing PMI improved from 50.6 to 51.6.
Market Reaction
The British pound (GBP) responded favorably to the PMI results, with GBP/USD climbing to about 1.3520 at the time of this update.
The table below illustrates the British Pound’s percentage changes against major currencies today, showing it performed strongest against the New Zealand dollar.
UK Services PMI Overview
The upcoming S&P Global PMI figures, set to be published at 9:30 PM Japan time on Friday, cover preliminary Purchasing Managers’ Index data for January. The S&P Global Services PMI is projected to reach 51.7, a slight uptick from last month’s 51.4.
Potential Impact on GBP/USD
Despite rising price pressures in December, analysts believe the S&P Global Services PMI may not significantly affect the sterling against the US dollar (USD), considering expectations that the Bank of England (BoE) will follow a conservative easing path. Traders will also keep an eye on Manufacturing and composite PMI results.
Interestingly, even a solid retail sales report wasn’t enough to elevate GBP/USD. UK retail sales increased by 0.4% month-on-month in December, contrary to predictions of a 0.1% decline. Core retail sales, excluding automotive fuel, also rose by 0.3% month-on-month compared to a previous decline of 0.4%. Annual retail sales climbed by 2.5%, while core annual sales saw a 3.1% increase.
There’s potential for the GBP/USD pair to recover some ground, as the US dollar might weaken amid geopolitical risks. For instance, former US President Donald Trump had threatened tariffs related to the Greenland project but stepped back after negotiating a deal within NATO.
From a technical perspective, GBP/USD is slightly easing after gaining over 0.5% in the prior session, hovering around 1.3490. The next target could be a three-month high of 1.3562, with immediate support at the 9-day exponential moving average (EMA) at 1.3450, followed by the 50-day EMA at 1.3397.
