GBP/USD: PMI data helps to lift the pound outweighing BoE and Brexit concerns

GBP/USD has been falling as BoE Governor Bailey seems open to negative rates but has recovered with the better than expected PMI data, Yohay Elam, an analyst at FXStreet, informs.

Key quotes

“Negative interest rates now seem imminent as Andrew Bailey, Governor of the BoE, told MPs that he had changed his opinion on the topic during the pandemic. The governor’s change of heart weighed on sterling.”

“Time is running out before the EU and the UK can agree to extend the transition period beyond year-end, and perhaps the last-minute public squabble will be replaced by intense videoconferences to reach an accord. However, the current lack of bonhomie is adding to pressure on the pound.” 

“Markit’s preliminary Purchasing Managers’ Indexes for May bounced from April’s devastating figures and even exceeded expectations. The manufacturing PMI jumped from 32.6 to 40.6 and the services PMI more than doubled from 13.4 to 27.8 points.” 

“US Jobless Claims are set to decline once again, albeit remain in the millions. Markit’s PMIs will likely show a bounce in the services sector, similar to the US. Perhaps the most interesting data point on Thursday is US Existing Home Sales, which will show the effect of coronavirus for the first time.”