- The US dollar strengthens with the entry into force of 2023, as the Dollar Index gains more than 1%.
- The US S&P Global PMI index was unchanged, although it remained in contractive territory.
- Manufacturing activity in the UK plunges for the fifth month in a row, raising fears of a UK recession.
The British pound (GBP) pared some of its previous losses against the US dollar (USD) after falling to the 100-day EMA, hitting a daily low of 11899. However, the rebound was short-lived, although the GBP/USD rose as high as the 1.2000 mark, but remained in negative territory during the day. At the time of writing, GBP/USD is trading at 1.1985, down 0.48% from its opening price.
The strength of the US dollar and the weakness of the UK PMI weighed on GBP/USD.
Wall Street caves to deteriorating sentiment. The US global manufacturing PMI for December was unchanged at 46.2 points. Siân Jones, Chief Economist at S&P Global Market Intelligence, said: “The manufacturing sector posted weak results in the final stretch of 2022, as production and new orders contracted at steeper rates. Demand for goods fell as internal orders and export sales fell. The weakness of demand also caused downward adjustments in portfolio values.”
Apart from this, the session on Tuesday saw the revival of the dollar. The Dollar Index (DXY), which measures the value of the dollar against a basket of six currencies, rose 1.12% to 104.653, hitting new two-week highs, putting a headwind for GBP/USD.
In the UK, the Manufacturing PMI, revealed by S&P Global/CIPS, fell to its lowest level in 31 months at 45.3, continuing its downward trend as it came down from November’s 46.5. It must be said that the index has remained below the neutral mark of 50 for five consecutive months. Digging deeper into the report, production, new orders, employment and inventories all slowed.
On the other hand, the US economic agenda remains busy with the publication of the minutes of the last Federal Reserve (Fed) meeting, together with the ISM PMI manufacturing index for December. As for the UK, mortgage approvals and loans will be announced.
GBP/USD Key Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
