GBP/USD extends rebound despite miss in UK PMIs

• GBP/USD slid into a second day of technical gains on Tuesday.

• Despite UK PMIs missing forecasts across the card, the Pound still found gains.

• Greenback traders are hesitating ahead of this week’s key US PCE inflation print.

GBP/USD extended into a second day of thin gains on Tuesday, rising from a messy technical bounce off the 50-day Exponential Moving Average (EMA) near 1.3500. UK Purchasing Managers Index (PMI) figures came in broadly lower than expected, but the Pound Sterling (GBP) still found gains after the US Dollar weakened across the board.

UK PMIs weakened much faster than expected in September, while US PMI figures for the same period also weakened, but stuck close to forecasts. General market sentiment remained on the high side, albeit shakily, and the UK side of the economic data docket is functionally wrapped up for the rest of the week.

On the US side, S&P Global Manufacturing PMI data from September fell to 52.0 from 53.0, as investors expected, while the Services PMI component slipped to the forecast of 53.9 from 54.5. American businesses that bothered to respond to the survey noted that overall output through September remained high, putting the US economy on pace to grow by around 2.2% on an annualized basis. However, the pace of hiring is also expected to slow in the coming months in the face of easing demand conditions, and businesses are growing uneasy about a still-growing overhang in inventory growth as signs of disappointing sales trends in the future continue to calcify.

The US’s latest round of Personal Consumption Expenditures Price Index (PCE) inflation is due on Friday, and investors will be looking to see if enough businesses are letting themselves get squeezed out of their own profit margins to avoid passing on too much of tariff costs directly onto consumers too quickly.

GBP/USD daily chart