- GBP/USD trimmed earlier gains near the 1.1600 figure on positive economic data from the US.
- The US service sector improved, while price pressures continued to ease.
- Kwasi Kwarteng, the so-called new UK chancellor: “The Truss government would not make a hole in public finances”.
The GBP/USD it fell towards its opening price after the US ISM Non-Manufacturing PMI, a gauge of the services sector in August, improved as supply bottlenecks and price pressures eased.
GBP/USD is trading at 1.1528, slightly above its opening price, after hitting a fresh weekly high around 1.1609, but better-than-expected US data sent the cable plummeting to a low daily around 1.1493.
The Institute for Supply Management reported that the US non-manufacturing PMI rose to 56.9 from 56.7 in July, above estimates of 54.9, according to Reuters. Some of the highlights of the report were that new orders rose to 61.8, up from 59.9 in July, while the prices paid index slowed to 71.5 from 72.3.
GBP/USD fell, hitting a daily low at the data release, at 1.1493. However, it bounced from the lows towards the current exchange rate. At the same time, the dollar index, a gauge of the dollar’s value against a basket of peers, approached 110,390, up 0.73%.
Earlier in the day, Queen Elizabeth named Liz Truss as the new Prime Minister of the United Kingdom. Meanwhile, Kwasi Kwarteng, who will be the next UK Chancellor of the Exchequer, claimed that the new government will not put a hole in public finances, as widely expected, according to the FT.
Kwarteng added that the new administration will act in a “fiscally responsible manner”, adding that the Truss government will be “bold” in promoting growth. He noted that “Liz is committed to a lean state, and as the immediate shock subsides, we will work to reduce the debt-to-GDP ratio over time.”
In terms of data, the UK economic docket included the S&P Global CIPS construction PMI for August, which came in at 49.2, up from 48.9 in July, but remaining in contraction territory. . The multi-sector PMI, which includes data from the services segment and manufacturing, fell to 49.6 from 51.8 in July, reinforcing the challenges that the new UK Prime Minister, Liz, will face. Truss.
What to watch out for
Halifax house prices for August will be released on the UK economic docket, while in the US the trade balance, along with data from the Fed, will shed some light on the economic situation in the US.
GBP/USD key technical levels
Source: Fx Street
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