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UK PMI shock sends pound higher: EUR/GBP, GBP/JPY and GBP/USD -by Ecork

Pound Sterling (GBP) Analysis

  • UK Flash PMI data for May revealed the slowest rise in business activity since the global recovery
  • The services sector has come under pressure due to the fastest rise in operating expenses since the index began
  • Track the chart response for GBP/USD, EUR/GBO, and GBP/JPY

Highlights of the May 2022 S&P Global UK PMI (Flash) report:

  • UK private sector firms indicated a sharp slowdown in business growth during May as mounting inflationary pressures and rising geopolitical uncertainty constrained customer demand.
  • The latest data indicated Fastest rise in operating expenses since the start of this indicator in 1998
  • The report showed The slowest rise in business activity since the current phase of recovery began in March 2021
  • The actual figure represents a decrease of 6.4 points in the index – Fourth largest monthly decline registered

Customize and filter live economic data via DaliyFX Economic calendar

Market reaction across selected GBP pairs

In the wake of the negative surprise, the already weakening Pound Sterling lost ground against the US Dollar. The long-term ,

Weakness of the pound against the dollar as feed it High rate of combat plans economic inflation.

5 minute chart of GBP/USD

UK PMI shock sends pound higher: EUR/GBP, GBP/JPY and GBP/USD

Source: TradingView, prepared by Richard Snow

In the shorter term, dollar weakness allowed the Pound to recoup some of its losses, but the shocking PMI release halted Sterling’s recent rally. 1.2400 becomes a level of interest if it is to stop further bearish price action.

British Pound / US Dollar daily chart

UK PMI shock sends pound higher: EUR/GBP, GBP/JPY and GBP/USD

Source: TradingView, prepared by Richard Snow

The Euro emerged as a surprising beneficiary from the massive selling of the British Pound. However, Euro sentiment has recently turned tougher in a number of countries European Central Bank Officials reported their preference for a rate hike in July – with no member ruling out a 50 basis point rate hike. In addition, the Bank of England It expects an economic contraction on the horizon for the UK while the European Central Bank has played down recession risks in the region despite its struggle to distance itself from Russian oil and gas purchases. 0.8595/0.8600 remains the key level if the recent rally in EUR/GBP continues.

EUR/GBP daily chart

UK PMI shock sends pound higher: EUR/GBP, GBP/JPY and GBP/USD

Source: TradingView, prepared by Richard Snow

The GBP/JPY chart is down about 200 points, or about 1.25%, following the PMI reading.

5 minute chart for GBP/JPY

UK PMI shock sends pound higher: EUR/GBP, GBP/JPY and GBP/USD

Source: TradingView, prepared by Richard Snow

Written by Richard Snow for DailyFX.com

Connect with Richard and follow him on Twitter: Tweet embednowFX

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