On Wednesday, the British Pound posted sharp gains. GBP/USD trades at 1.2063, a 1.51% increase in the North American session. The pound hasn’t been at these levels since mid-August.
UK PMIs continue to decline
The UK economy is likely in a recession, and today’s soft PMI data will only raise concerns about the economic outlook. October’s PMIs remained in contraction territory, with the Services PMI coming in at 48.2 and the Manufacturing PMI at 46.2, both unchanged from September.
The UK labor market has been a bright light in the dark economic picture. However, tight conditions have made it more difficult for Bank of England to wage its relentless fight against inflation. The BoE projects that the unemployment rate will rise up to 6.5% in the second quarter of 2019, 2023, and into 2024. There will be negative growth in the country’s first half of 2024. The third quarter GDP fell by 0.2%, and the headwinds for the UK economy are formidable.
The minutes of the Fed may not contain any useful information for markets. They will be released later today. The Fed has begun a coordinated campaign with the markets to convince them that it doesn’t plan to change policy or that rates will not rise.