UK Services PMI improves, pound continues losing streak

[Ben Graham]

The British pound is down for a fourth straight day and has dropped 0.9% this week. In the North American session, GBP/USD is trading at 1.3432, down 0.16% on the day.

The UK was scheduled to release July retail sales on Friday, with a market estimate of 0.4%, but that has been delayed until September 5.

UK PMIs: services accelerates, manufacturing weakens

UK PMIs were a mixed bag in August. The Services PMI improved to 53.6, up from 51.8 in July and above the market estimate of 51.8. Business activity rose for a fourth straight month and hit its fastest pace in a year. There was an increase in new orders and business confidence rose on expectations that consumer demand will improve.

The manufacturing sector continues to struggle and the contraction worsened in August. The PMI fell to 47.3 in August from 48.0 in July. New orders decreased and employment losses deepened as the uncertainty over US tariffs has resulted in subdued global demand. The silver lining was that manufacturers' optimism improved.

Fed minutes points to split

The Federal Reserve released the minutes of the July meeting on Wednesday. The Fed didn't surprise anyone by maintaining rates but the meeting made headlines when two FOMC members voted against the majority in favor of a rate cut. This was the first time in over 30 years that more than one member has voted against a rate decision.

The minutes noted the differing views on the Fed's dual mandate of inflation and employment. The economy faces an upside risk to inflation and a downside risk to employment, complicating rate decisions. At the meeting, the majority judged higher inflation as the greater risk while the minority believed that the deterioration in the labour market was the greater risk.

The Fed is expected to lower rates in September for the first time since December 2024, with an 80% probability of a quarter-point cut according to CME's FedWatch.

GBP/USD Technical

• GBPUSD is testing support at 1.3431. Below, there is support at 1.3416
• There is resistance at 1.3457 and 1.3472

GBPUSD 4-Hour Chart, Aug. 21, 2025

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