GBP: Next Leg for GBP Could Hinge on PMIs

USD selling pressure helped aid GBP/USD to a new recovery high this morning at 1.2975, with momentum slipping away before any re-test of the mid-July highs. A break and close above the 1.2955 retracement would be a bullish sign for the pair this week, opening 1.3044 and above, however broad USD strength would turn focus to 1.2854 - a level that helped contain rallies last week and a break below which would reorient focus on strong support at the 1.2680 200-dma.

• This week's prelim August PMI numbers will be of particular focus, and markets will be watching to confirm whether the stabilisation of sentiment in July was largely due to the perception of political stability after the General Election, or the beginning of a broader trend for stronger sentiment. 
• Both hiring and new orders were greenshoots in the July survey - and further strength here could limit the pricing for BoE cuts across the second half of '24, via either softer pricing for September (8bps cuts currently priced) or December (cumulative 42bps priced).