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GBPUSD:
The GBP/USD exchange rate demonstrated instability on Monday, commencing the week with an absence of clarity, as the pair remained in close proximity to the 1.2900 mark. Economic data from the UK and the US was published on Monday, and revealed a mixed picture, as businesses surveyed expressed a mixed outlook on the Purchasing Managers’ Index (PMI).
US President Donald Trump’s latest comments, in which he threatened to impose tariffs, had a negative effect on investor sentiment. Investors took the opportunity to speculate on the possibility of a tariff exemption for Donald Trump’s trade policy, which helped to stabilise market sentiment and limit the impact on the US Dollar.
Meanwhile, UK PMI data in early Monday’s session was mixed, with the manufacturing PMI component falling to an 18-month low of 44.6 in March. In contrast, the services sector exhibited a more robust performance, rising to a seven-month high of 53.2. However, overall business activity expectations remain subdued, reflecting the UK’s uncertain economic outlook.
In contrast, the US manufacturing PMI survey results for March fell faster than expected, as tariff threats undermined the outlook for physical production. The manufacturing PMI for March fell to a three-month low of 49.8, returning to contractionary territory as businesses grew increasingly concerned about the economy. In contrast, the services sector PMI registered at 54.3, marking a three-month high, as service providers anticipate the ability to fully pass on cost increases to consumers.
On Tuesday, market participants will face a low-information economic calendar, but traders are eagerly awaiting the UK’s February Consumer Price Index (CPI) release on Wednesday. UK core CPI inflation is expected to fall slightly to 2.9% from 3.0% y/y.
Trading recommendation: SELL 1.2905, SL 1.2985, TP 1.2815
Origin: FreshForex
