Pound Sterling Retreats as US Dollar Stages a Recovery
The Pound Sterling (GBP) has retreated from its daily high of 1.3567 against the US Dollar (USD) on Tuesday, despite weaker Purchasing Managers Index (PMI) data from the US. The GBP/USD exchange rate currently stands at 1.3519, representing a 0.15% decline. This reversal comes as the US Dollar stages a recovery, shrugging off the weaker data and neutral Federal Reserve (Fed) officials’ remarks.
US Economic Activity Weakening at a Moderate Pace
According to recent data released by S&P Global, economic activity in the US is weakening, albeit at a moderate pace. The December Services PMI stood at 52.5, down from November’s 52.9, while the Composite PMI index came in at 52.7 for the same period, down from 53 in the previous month. Richmond Fed President Thomas Barkin noted that future rate decisions will need to be “finely tuned” given the risks of unemployment and inflation goals, adding that the current policy rate is within the neutral range.
Fed Officials’ Remarks and Their Impact on the Market
Fed Governor Stephen Miran adopted a dovish stance, stating that the central bank will adjust the policy rate down and expects data to signal that cuts are appropriate. Miran suggested cutting 100 basis points in 2026. Despite these remarks, the US Dollar Index (DXY), which tracks the buck’s value against six other currencies, has posted gains of 0.25% at 98.61, trimming some of its Monday losses.
UK Services PMI and Its Implications for the Bank of England
Across the pond, the UK S&P Global Services PMI came in at 51.4 in December, up from 51.3 in November. The report highlighted that inflationary pressures across the service economy strengthened at the end of the year, with input prices rising to the greatest extent for seven months. This could potentially dent the Bank of England’s plans to resume its easing cycle in 2026.
Technical Outlook for GBP/USD
From a technical standpoint, the GBP/USD seems poised to retreat, despite maintaining bullish momentum. The failure of buyers to clear the 1.3600 mark has exacerbated the ongoing pullback towards the 1.3500 figure. If this level is broken, it could pave the way for a test of the 200-day SMA key support level at 1.3385, with the next stop being the 100-day SMA at 1.3369.
Major Currency Prices This Week
The table below shows the percentage change of the British Pound (GBP) against listed major currencies this week. The British Pound was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.29% | -0.26% | -0.13% | 0.30% | -0.74% | -0.31% | 0.35% | |
| EUR | -0.29% | -0.55% | -0.37% | 0.00% | -1.03% | -0.60% | 0.06% | |
| GBP | 0.26% | 0.55% | 0.11% | 0.60% | -0.49% | -0.05% | 0.61% | |
| JPY | 0.13% | 0.37% | -0.11% | 0.41% | -0.64% | -0.20% | 0.51% | |
| CAD | -0.30% | -0.01% | -0.60% | -0.41% | -0.89% | -0.62% | 0.05% | |
| AUD | 0.74% | 1.03% | 0.49% | 0.64% | 0.89% | 0.44% | 1.11% | |
| NZD | 0.31% | 0.60% | 0.05% | 0.20% | 0.62% | -0.44% | 0.67% | |
| CHF | -0.35% | -0.06% | -0.61% | -0.51% | -0.05% | -1.11% | -0.67% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Smart Tip for Readers
To stay informed about the latest developments in the foreign exchange market, it’s essential to monitor economic indicators, such as PMI data and central bank officials’ remarks, as they can significantly impact currency exchange rates. For more information, visit Here
