The Pound Sterling (GBP) traded slightly lower against major currencies on Thursday as markets turned cautious ahead of the UK’s preliminary S&P Global Purchasing Managers’ Index (PMI) data for July, due at 08:30 GMT.
Economists anticipate a slight dip in the Composite PMI, forecasting a reading of 51.9, just below June’s 52.0, indicating ongoing but modest expansion in business activity. Market participants will be closely watching employment trends within the private sector, especially after recent labor data hinted at a slowdown—partly due to rising employer contributions to social security schemes. Additionally, investors are keeping an eye on export orders amid ongoing trade uncertainty ahead of the US tariff deadline on August 1.
US PMI, Trade Sentiment Drive Market Mood
In the North American session, focus will shift to the US preliminary PMI report for July, which is expected to show stronger growth in business activity. This data could influence short-term direction for the GBP/USD pair.
Despite early weakness, the Pound continues to hold firm near a two-week high around 1.3580 against the US Dollar (USD) during Thursday’s European session. The pair is supported by persistent USD weakness, driven by reduced demand for safe-haven assets and growing optimism around a potential EU-US trade agreement.
The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, remains subdued near 97.00—close to a fresh three-week low. Market sentiment has improved following reports from the Financial Times that the US and EU may be close to finalizing a trade deal. The agreement would mirror the recently announced US-Japan tariff pact, introducing a 15% baseline levy and reducing tariffs on key imports such as automobiles.
EU officials appear eager to conclude the deal before the August 1 deadline, aiming to avoid a broader trade dispute. If confirmed, the agreement could reduce global trade tensions and further support risk assets like the Pound.
Focus Turns to Fed Policy Outlook
Looking ahead, the next major catalyst for the US Dollar will be the Federal Reserve’s policy announcement scheduled for next Wednesday. According to the CME FedWatch tool, markets largely expect the Fed to hold interest rates steady in the current range of 4.25%–4.50%. However, traders will pay close attention to Fed Chair Jerome Powell’s commentary, especially in light of concerns that new tariffs could fuel inflationary pressures.
Technical Outlook: GBP/USD Turns Bullish
Technically, the GBP/USD pair maintains a bullish bias as it trades near 1.3580—its highest level in two weeks. The pair has reclaimed ground above the 20-day Exponential Moving Average (EMA), currently near 1.3526, suggesting renewed buying momentum.
The 14-day Relative Strength Index (RSI) has also moved above the 50.00 mark, signaling strengthening bullish interest. Key support lies at the May 12 low of 1.3140, while immediate resistance is seen at the July 1 high near 1.3790.
