Shocking PMI UK sends spiraling pound rate: EUR / GBP, GBP / JPY and GBP / USD

Pound Sterling (GBP) Analysis.

• British PMI (Flash) data for May showed the slowest growth in business activity since the recovery in the world
• The services sector has been strained by the fastest growth in operating costs since the beginning of the index
• Tracking response chart for GBP / USD, EUR / GBP and GBP / JPY

Highlights of the May 2022 S&P Global UK PMI (Flash) report:

• UK private sector firms signaled a sharp slowdown in business growth in May as escalating inflationary pressures and growing geopolitical uncertainty restrained customer demand.
• The latest data pointed to the fastest growth in operating expenses since the beginning of this index in 1998
• The report showed the slowest growth of business activity since the beginning of the current phase of recovery in March 2021
• The combined figure represents a drop in index scores of 6.4 – 4th largest monthly decline on record

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EU PMI data were published at the same time and analyzed Justin McQueen in his last market alert.

Market reaction to selected sterling crosses

After a negative surprise and already weakened pound lost position in US dollar. In the long run,

the pound weakened against the dollar Fed accelerated tariff increases are planned to fight inflation.

GBP /USD 5-minute schedule

Source: TradingView, prepared Richard Snow

In the short term, a much softer dollar allowed the pound to recover some losses, but the shocking release of PMI halted the recent appreciation of the pound sterling. 1.2400 becomes the level of interest when it has to stop further bearish price action.

GBP / USD daily chart

Source: TradingView, prepared Richard Snow

The euro became an amazing beneficiary of the pound sale. Recently, however, sentiment in the euro has become hawkish ECB officials said they prefer to raise rates in July – in particular, one member does not rule out a 50 bp increase. In addition, Bank of England predicts economic contraction for the UK, while the ECB reduces recession risks for the region, despite the desire to distance itself from Russia oil and gas procurement. 0.8595 / 0.8600 remains a key level if recent EUR / GBP growth continues.

Daily EUR / GBP schedule

Source: TradingView, prepared Richard Snow

GBP /JPY the chart decreased by about 200 points, or about 1.25%, after the PMI print.

5-minute GBP / JPY chart

Source: TradingView, prepared Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX