Pound (GBP) Exchange Rates Set for Losses if Markit Composite PMI Falls Further into Contraction
Looking ahead to Monday, Pound Sterling (GBP) exchange rates could remain under pressure following the release of the UK services PMI and PMI composite.
Last week data from Markit revealed both the manufacturing and construction PMI remained in contraction territory. Manufacturing remained stuck at a six-and-a-half year low while the construction PMI revealed business optimism slipped to its lowest level since November 2012.
If the services PMI slides below the 50 no-change mark and the composite PMI falls further into contraction Sterling will slide against rivals like the Euro and US Dollar.
However, the Pound US Dollar (GBP/USD) exchange rate could claw back some losses later in the afternoon if the US ISM composite PMI disappoints.
Flash GDP to Slide as Brexit Fears Grip UK Economy
On Thursday, while the Bank of England (BoE) left interest rates unchanged, its economic growth forecasts for 2019 and 2020 were revised lower.
The bank now expects 1.3% growth in both 2019 and 2020, down from its previous forecast of 1.5% and 1.6% growth.
The BoE also highlighted the dangers of a no-deal Brexit which could cause Sterling to slump lower.
The bank’s lower forecasts and persistent worries about a no-deal Brexit caused the GBP/EUR exchange rate to slump to the its lowest level since September 2017, while GBP/USD plummeted to its lowest level since January 2017.
At the end of next week, Pound Sterling exchange rates will likely fall ahead of the UK flash GDP data.
Sterling could slide if preliminary data reveals that the UK economy has stagnated in the three months to June.
Pound sentiment would be further dampened as year-on-year growth is set to fall to its slowest level since the final quarter of 2018.
If economic growth disappoints, the Pound will slide against both the US Dollar and single currency.
Will GBP Exchange Rates Dip as Manufacturing Stagnates in June?
Meanwhile, the Pound could slump further on Friday following the release of the UK manufacturing production data.
Data from Markit released this week found that UK manufacturing production fell by the greatest extent in seven years as demand from both domestic and overseas markets weakened.
If annual manufacturing production slumps further than expected in June following stagnation in May, Sterling will slide against a handful of currencies.