GBP/USD in a range below 1.2650 unable to benefit from a weaker USD
- Pound flat against US Dollar holds in negative territory versus Euro.
- Dollar Index down drops to test weekly lows as equity markets recover.
- Data: US manufacturing number from May below expectations.
The GBP/USD pair bottomed earlier today at 1.2609 and then recovered modestly, finding resistance below 1.2650. The move higher took place amid a decline of the greenback across the board.
The US Dollar Index dropped to the lowest in a week at 97.55, affected by the improvement in risk sentiment and also by weaker-than-expected US data. Both manufacturing reports released today came in below expectations. The Markit PMI dropped to 50.5 while the ISM retreat to 52.1 from 52.8 of the previous month and under the 53.0 of market expectations. “The latest manufacturing survey from the US will do little to dampen concerns about an economic slowdown. But while the risks are mounting, we think markets may be getting a little bit ahead of themselves when pricing in four rate cuts by the end of 2020,” wrote ING analysts.
The UK manufacturing PMI also showed lower-than-expected numbers but attention in the UK continues to be on Brexit and political uncertainties that could continue to weigh on the Pound.
As of writing, GBP/USD is trading flat for the day around 1.2620/30, around the same level it closed on Friday, after the recovery from 1.2558 (May 31 low) lost momentum today near 1.2660. The pair is moving sideways between 1.2650 and 1.2610.
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