Sterling (GBP) Price, Chart and Analysis:
- BoE rate cut ‘killed off’ by expectation-beating UK PMI release.
- Withdrawal Agreement signed-off by EU chiefs.
British Pound (GBP) Underpinned by Encouraging PMI Data
The eagerly-awaited UK PMI releases for January, the first look at sentiment post-General Election, showed ‘an encouraging start to 2020’ according to data provider IHS Markit. The survey points to a 0.2% quarterly rate growth, while the ‘uplift in sentiment about the outlook hints at even better growth to come.’
According to Chris Williamson, chief business economist at IHS Markit, “It seems likely that the rise in the PMI kills off the prospect of an imminent rate cut by the Bank of England, with policymakers taking a wait and see approach as they assess the performance of the economy in the post-Brexit environment.”
Brexit Withdrawal Agreement Signed of in Brussels
The UK-EU Withdrawal Agreement was signed off yesterday by European Commission President Charles Michel and European Commission President Ursula von der Leyen with the bill now going to the European Parliament on January 29 for final ratification. The UK is set to leave the EU on January 31 before entering a transition period in February ahead of the all-important UK-EU trade talks.
GBP/USD Price Slips Lower Post-PMIs but Remains Supported
A bout of profit-taking hit Sterling across the board post-PMIs. The British Pound has been one of the best performing currencies over the last few days, ahead of the PMIs, as traders started to price-out a cut in interest rates at next Thursday’s Bank of England MPC meeting. The daily GBP/USD price chart shows the pair still above the recent downtrend and bouncing back off the 20- and 50-day moving averages situated around 1.3080. There remains support between 1.3035 all the way down to 1.2950 and this should hold firm in the coming days.
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GBP/USD Daily Price Chart (July 2019 – January 24, 2020)
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