UK posts soft PMIs, retail sales expected to rebound, Pound edges lower
BY
Ben Graham
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The British pound has enjoyed a strong run this week but is in negative territory on Thursday. In the North American session, GBP/USD is trading at 1.3540, down 0.28% on the day. Over the past three days, the pound has jumped 1.3%, as the major currencies have gained ground against the US dollar.
UK services dip, manufacturing contracts in July
UK PMIs weakened in July, another sign of trouble in the UK economy. Services PMI dropped to 51.2, down from 52.8 in June and shy of the market estimate of 53.0. New orders were down and service managers pointed to weak domestic demand and a drop in exports due to global trade tensions.
The manufacturing PMI posted a slight improvement in July, rising to 48.2 from 47.7. The reading was just above the market consensus of 48.0 and marked a six-month high, as manufacturing remains mired in contraction. New orders are down as businesses delay spending decisions due to uncertainty over US trade policy.
The UK wraps up the week with retail sales on Friday. The markets expect a rebound in June after a dismal May, in which retail sales declined 2.7% y/y and 1.3% m/m. The market estimate is for gains of 1.8% y/y and 1.2% m/m.
US services heat up, manufacturing declines
In the US, Services PMI rose to 55.2 in July, up from 52.9 in June and above the market estimate of 53.0. This indicated strong expansion and was the fastest pace of growth in seven months. Manufacturing headed the opposite direction, falling from 52.6 in June, a 37-month high, to 49.5. This was the first contraction since December, with new orders and employment falling.
GBP/USD Technical
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