ExchangeRates.org.uk - At the time of writing GBP/USD was trading at around $1.2639, virtually unchanged from Monday’s opening rate. The US Dollar (USD) struggled to garner investor attention on Thursday following the publication of the finalised ISM manufacturing PMIs for June. June’s index unexpectedly fell from 48.7 down to 48.5 missing forecasts of a 49.1. The data also pointed to a third consecutive month decline within the sector, reaching its weakest level since February 2024.
An exert from the index read: ‘Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions. Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability. Suppliers continue to have capacity, with lead times improving and shortages not as severe. Sixty-two percent of manufacturing gross domestic product (GDP) contracted in June, up from 55 percent in May.’
As such, the USD sentiment remain limited for the majority of Thursday’s European session.
Pound (GBP) Underpinned by PMIs
The Pound (GBP) managed to stay above ground against the majority of its peers on Monday following the UK’s finalised manufacturing index for June. Although the survey was revised lower, falling from 51.2 to 50.9 rather than rising to 51.4, the index remained in expansion territory (a score over 50) and continued to point to an upward trend in the UK manufacturing sector.
Rob Dobson, Director at S&P Global Market Intelligence commented: ‘The UK manufacturing sector is enjoying its strongest spell of growth for over two years, with June seeing output and new order growth sustained at robust rates similar to May's recent highs. The performance of the domestic market remains a real positive, providing a ripe source of new contract wins. In contrast, the ongoing weak export performance is concerning, with manufacturers reporting difficulties in securing new business in several key markets including the US, China and mainland Europe.’
However, this wasn’t enough to buoy Sterling on Monday as GBP investors refrained from placing any aggressive bets ahead of the UK’s general election coming up on Thursday.
GBP/USD Exchange Rate Forecast: UK Election to Drive Movement?
Looking ahead, the primary catalyst of movement for the Pound US Dollar exchange rate this week will likely be the UK’s upcoming general election. Scheduled for Thursday, any unexpected results could infuse substantial volatility into GBP exchange rates towards the latter stages of the week. Before that, the US will publish its latest JOLT job openings data, scheduled for release on Tuesday. Should May’s index rise from April’s three-year low, this could lend the ‘Greenback’ some modest support towards the middle of the week. Risk appetite could also impact the GBP/USD exchange rate this week. Should markets engage in positive trade, the Pound US Dollar exchange rate will likely firm, however, should markets opt for safter assets, GBP/USD could spend the week on the back foot.
This content was originally published on ExchangeRates.org.uk
