During the Asian session, GBP/USD experienced a sharp decline.
The British pound sterling, paired with the US dollar, initially saw a decline on Thursday morning but managed to stabilize later. The current exchange rate for GBP/USD is at 1.2717.
The morning’s downward movement could be attributed to the execution of specific trading signals. Interestingly, this is the third instance in the past few weeks where the pound has experienced a downward slide without resulting in a trend reversal.
However, beyond these technical factors, there are underlying reasons for the pound’s weakness. Recent data on the manufacturing PMI, released yesterday, revealed that the indicator had fallen to its lowest point in 39 months, reaching 42.5 points. Business activity in the UK services sector also contracted to a 7-month low, registering at 48.7 points.
As a result, the likelihood of an impending economic downturn in the UK is growing. The noticeable deterioration in conditions within the manufacturing sector is coupled with a slowdown in activity in the non-manufacturing sector. There are concerns that the UK’s GDP could contract by 0.2% in Q3.
The Bank of England is expected to raise interest rates by 25 basis points at its meeting on September 21. However, further tightening of monetary conditions appears uncertain due to doubts about the economy’s capacity to withstand it. These factors are collectively putting pressure on GBP positions.
The post There Appears to be an Issue With the Pound – Overview for August 24, 2023 appeared first at R Blog – RoboForex.