The Pound Sterling has found support near 1.2620 against the US Dollar, trading around 1.2680 in Monday’s early New York session after a recent sell-off. The GBP/USD pair has rebounded as the US Dollar Index struggles to extend upside above 106.00.
The US Dollar’s near-term outlook has strengthened after the preliminary S&P Global Purchasing Managers Index (PMI) report for June showed unexpected expansion in manufacturing and service sector activities. The Composite PMI jumped to 51.7, higher than the expected 51.0, boosting the mood of Federal Reserve policymakers.
Market speculation suggests that the Bank of England (BoE) will start reducing interest rates from the August meeting. The BoE’s slightly dovish monetary policy statement on the interest rate outlook has led to expectations of rate cuts in the near future.
The UK’s economic outlook is uncertain ahead of the UK elections, with concerns raised by the slowdown in the service sector in June. However, the Manufacturing PMI has shown faster expansion, indicating some resilience in the economy.
The Pound Sterling has shown significant gains against the US Dollar today, being the strongest against the USD among major currencies. Despite concerns about the UK’s economic outlook, the Pound’s performance remains robust.
Technical analysis indicates that the Pound Sterling has slid below key support levels against the US Dollar, including Fibonacci retracement support. The 14-day Relative Strength Index suggests that upside momentum has faded, raising uncertainty about the near-term outlook for the GBP/USD pair.