empty
02.09.2019 10:53 AM
PMI data reinforces sterling selling, EUR/GBP still a fade on rallies

The sterling was resilient on Friday with EUR/GBP retreating to the 0.9025 area, although the wider dollar's strength pushed GBP/USD below 1.2200.

There was significant weakness in early Europe on Monday with EUR/GBP strengthening to 0.9065 while GBP/USD slid to lows just below 1.2100.

Political developments will inevitably deal a blow to GBP value due to crucial developments in the House of Commons when it returns from recess on Tuesday.

Opposition party members will intensify their efforts to avoid the scenario of a no-deal Brexit at the end of October. The most likely mechanisms for MPs are to attempt to pass the legislation which would force the government to ask for a further Brexit extension if there no deal is finalized by October 31st. There is also the possibility that there will be a no-confidence vote in the government.

Prime Minister Johnson has stepped up pressure on potential rebel Conservative MPs. He stated that they would be thrown out of the party and de-selected for the next General Election if they vote against the government.

A high degree of uncertainty is hanging over the outcome given serious divisions within parliament.

This uncertainty will be a crucial factor as EU leaders are unlikely to review their position and offer concessions on the controversial Northern Ireland backstop if there is no evidence that any revised deal will be passed by the UK parliament.

The UK PMI manufacturing index tumbled to 47.4 for August from 48.0 the previous month and the weakest reading for 85 month. New orders declined sharply to a 7-year low and business confidence also worsened to record lows as political uncertainty sapped sentiment.

The weak data will reinforce fears over the near-term outlook and medium-term damage to the economy, but the euro is still poorly placed to take advantage of the UK's vulnerability with EUR/USD sliding below 1.1000.

Latest CFTC data indicated only a small reduction in short, non-commercial sterling positions with the number of contracts still close to 2-year highs. The data still indicates scope for position liquidation and sharp sterling's gains if there is a shift in sentiment.

A major problem for the sterling bulls is the lack of an obvious trigger for improving sentiment. Thus, sellers will be looking to target 1.2000 in GBP/USD before a potentially sharp rebound.

This image is no longer relevant

Tim Clayton,
Analytical expert of InstaTrade
© 2007-2025

Recommended Stories

USD/JPY. Analysis and Forecast

The USD/JPY pair is holding above the key 144.00 level amid continued weakness in the U.S. dollar. Strong household spending data released today in Japan has strengthened expectations

Irina Yanina 18:12 2025-07-04 UTC+2

NZD/USD. Analysis and Forecast

The NZD/USD currency pair is recovering after bouncing from the 0.6030 level, which marks a weekly low, and is attempting to gain further positive momentum. This suggests a break

Irina Yanina 18:08 2025-07-04 UTC+2

USD/CAD. Analysis and Forecast

On Friday, the USD/CAD pair remains near a three-week low, trading below the key 1.3600 level. The U.S. dollar is struggling to extend its gains following yesterday's stronger-than-expected Nonfarm Payrolls

Irina Yanina 17:59 2025-07-04 UTC+2

The Market Celebrates a Victory

Financial markets responded positively to the release of U.S. employment statistics for June. Payrolls rose by 143,000, exceeding Bloomberg analysts' forecasts. April and May figures were revised upward

Marek Petkovich 10:15 2025-07-04 UTC+2

Next Week May Begin on a Positive Note for the Markets (Possible Resumption of Growth in #SPX and #NDX)

The U.S. labor market data, published by the Department of Labor, instilled cautious optimism among investors, extending the rally in U.S. equity markets, supporting the dollar, and weakening gold prices

Pati Gani 10:09 2025-07-04 UTC+2

The Market is Preparing for Another Shock

Just yesterday, U.S. President Donald Trump announced that his administration would begin sending letters to trade partners on Friday, outlining unilateral tariff rates that, according to him, countries will

Jakub Novak 09:55 2025-07-04 UTC+2

Strong U.S. Employment Report Exceeds All Expectations

The U.S. dollar surged against a range of risk assets as the key figures in June's employment report convinced the Federal Reserve that there is no need to lower interest

Jakub Novak 09:49 2025-07-04 UTC+2

What to Pay Attention to on July 4? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Friday. As previously mentioned, today is a public holiday in the United States, known as Independence Day. All banks and stock exchanges will

Paolo Greco 07:59 2025-07-04 UTC+2

GBP/USD Overview – July 4: Reeves Cried — Did the Pound Collapse?

The GBP/USD currency pair also traded fairly calmly throughout Thursday until the start of the U.S. trading session. Recall that a day earlier, the British currency had plummeted by nearly

Paolo Greco 03:56 2025-07-04 UTC+2

EUR/USD Overview – July 4: Trump's Third Trade Deal Didn't Help the Dollar Either

The EUR/USD currency pair traded very calmly throughout Thursday, until unemployment and labor market reports were released in the United States. However, we will discuss those reports in other articles

Paolo Greco 03:56 2025-07-04 UTC+2
Can't speak right now?
Ask your question in the chat.
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaTrade anyway.

We are sorry for any inconvenience caused by this message.