ExchangeRates.org.uk - On Monday, the Pound (GBP) gained strength against most of its counterparts following the release of the UK's preliminary PMI data for December.The report revealed that the UK's manufacturing index continued its downward trend, dropping from 48.0 to 47.3, which was contrary to the anticipated rise to 48.2.
However, the UK's crucial services index outperformed market expectations in December, increasing from 50.8 to 51.4, well above the modest forecast of 51.0.
The stronger-than-expected performance in the services sector gave a significant lift to GBP exchange rates in the aftermath of the release.
The US Dollar (USD) traded in a wide range on Monday following the publication of the country’s preliminary S&P global PMIs.
Similarly to the Pound, the US’s latest manufacturing index ticked lower from a previous reading of 49.7 down to 48.3, behind estimates it would rise to 49.8.
However, the country’s services index also exceeded expectations and rose from 56.1 to 58.5 rather than dipping to 55.7, and marked the highest reading in the services sector since October 2021.
Despite this upbeat reading, the ‘Greenback’ failed to capitalise on the economic release, and slumped against the Pound while remaining largely muted elsewhere.
GBP/USD Exchange Rate Forecast: UK and US Data in Focus
Looking ahead, the primary catalyst of movement for the Pound US Dollar exchange rate looking ahead to Tuesday will likely be the publication of some high impact data from both the UK and the US.
Up first, the UK's unemployment rate is projected to stay at 4.3%, while average earnings (excluding bonuses) are anticipated to climb from 4.8% to 5%.
This combination of economic indicators could influence GBP exchange rates, especially if there's any heightened uncertainty about the state of the UK's labour market.
Turning to the US, the country will release its latest retail sales index which could see USD exchange rates firm should the data mirror expectations and rise from 0.4% to 0.5%.
This content was originally published on ExchangeRates.org.uk