GBP/USD Falls Following Softer UK PMI
GBP/USD retreated during early London trading on Friday, falling from the intraday rejection at 1.3475 toward session lows near 1.3450 at the time of writing. The pair turned negative on the daily chart after the downward revision of the United Kingdom’s final December S&P Global Manufacturing PMI, although it remains within the weekly range and above the 1.3400 support zone.
The final UK Manufacturing PMI released earlier on Friday showed that the sector expanded at a slower pace than initially estimated. The reading was revised down to 50.6 from the preliminary 51.2, though it remains above the 50.0 threshold that separates expansion from contraction, and also above November’s 50.2 figure.
The softer revision weighed on the Pound, triggering mild selling pressure as markets reassessed the strength of the UK’s manufacturing recovery.
The short‑term trend for GBP/USD has been bearish since the late‑December highs above 1.3530, yet the pair still holds most of the gains accumulated during the November–December rally. GBP/USD ended 2025 with an advance of more than 7%, supported by concerns surrounding the President of the United States’ unpredictable trade policies, signs of economic slowdown in the United States, and political pressure on the Federal Reserve to cut interest rates.
These factors have collectively weighed on the US Dollar over the past year, limiting its ability to stage a meaningful recovery.
Looking ahead, monetary policy divergence between the Bank of England (BoE) and the Federal Reserve (Fed) remains a key driver for GBP/USD.
The BoE cut rates in December in a razor‑thin decision, but persistently high inflation and strong opposition within the Monetary Policy Committee make further easing unlikely in the near term.
The Federal Reserve, on the other hand, is expected to cut rates at least once more in 2026 — potentially more if the President of the United States appoints a new, more dovish‑leaning Fed Chair, as repeatedly suggested.
Unless the broader context shifts significantly, these dynamics are likely to keep US Dollar recovery attempts limited.