Pound trades higher as US Manufacturing data misses target
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Daily Currency Update
GBP/USD briefly traded above 1.28 overnight, buoyed by some underwhelming US economic data and improving sentiment towards the pound. The United States' monthly ISM Manufacturing PMI from yesterday came in at 48.7, which was lower than the expected 49.8 and down from the previous month's reading of 49.2. The sector is struggling to return to growth after being significantly impacted by high prices over the past couple of years. GBP/USD rallied from 1.2740 after the release, reaching around 1.2815 during the Asian session before retracting this morning. EUR/USD mirrored the move, briefly rising above 1.09 before falling back. On the domestic front, the upcoming general election dominates the news, with polls continuing to show a large lead for Labour. This lead could be extended further after Nigel Farage decided to stand for election in Clacton and take up the leadership of Reform UK. Farage will likely draw some Tory voters across to Reform, which could swing the outcome in Labour's favor in some marginal seats. The pound has reacted positively to the decision to hold an election sooner than many predicted, with many saying the removal of the uncertainty of when it will happen adds support. Currently, GBP/USD is at 1.2790, EUR/USD at 1.0890, and GBP/EUR around 1.1750.Key Movers
It's a relatively quiet day on the data front, with markets likely already focused on this Thursday's European Central Bank interest rate decision. It is all but guaranteed that the ECB will cut rates from 4.5% to 4.25%. However, what will be closely watched is the messaging about what's going to happen in the second half of the year. There's a lot of uncertainty over this, so we could see some volatility as the statement is published along with the decision at 1:15 pm. ECB chief Christine Lagarde will hold a press conference 30 minutes after the decision, so any comments from her on what happens next will impact the euro's value.Expected Ranges
- GBP/USD: 1.2720 - 1.2860 ▲
- GBP/EUR: 1.1700 - 1.1785 ▲
- GBP/AUD: 1.9160 - 1.9310 ▲
- EUR/USD: 1.0815 - 1.0940 ▲