GBP Under Pressure Following PMI Miss

PMIs Drop AgainFollowing on from the weak eurozone data we saw this morning, the latest round of PMIs out of the UK today struck a similar tone. The manufacturing PMI was seen falling to 45 from 46.5 prior while the services PMI was a little better at 51.1, though still down from the prior month’s 53.7 reading. Both sets of PMI readings undershot market forecasts with the overall composite PMI seen dropping to 50.7 from 52.8 prior, barely clinging to positive territory.Recession Risks RemainThe UK has been fighting off recession warnings for most of the year and while these forecasts have largely eased up recently, this latest data shows that there is still plenty of wood to chop. Inflation has cooled over the last month, taking some pressure off the BOE. However, the impact of elevated rates and inflation is being felt clearly in the manufacturing sector and, with at least one more BOE hike expected, this impact looks set to intensify near-term.Central Banks on WatchLooking ahead this week, with no further tier-one data to come for the UK, GBP flows are likely to be heavily dictated by the tone of the Fed and ECB rates meeting due mid-week. With both central banks set to hike further, GBP might well see further selling pressure across the week, the scale of which will depend on the forward guidance issued at those meetings.Technical ViewsGBPUSDThe correction in GBPUSD has seen the market trading heavily back under the 1.2992 level. Price is now fast approaching a test of the rising trendline. If broken, focus turns to 1.2659 next, in line with bearish momentum studies readings, with 1.2437 the deeper level to note.