In May, the S&P Global Composite Purchasing Managers’ Index (PMI) in the United Kingdom showed a notable improvement, rising to 49.4 in the flash estimate from April’s figure of 48.5. This upward tick is good news and indicates some recovery in economic activity. The index is still below the neutral – 50 – level, indicating continued general growth constraint.
As Thursday went on during the European trading session, the EUR/USD currency pair started to find a bottom around the 1.1300 level. Market participants have their eyes glued to the economic data rolling in from the U.S. This information would likely be highly influential on their trading decisions. The EUR/USD currency pair has been trading within a very narrow daily range. This is perhaps most telling of the mystery that surrounded any future movement.
At the same time, gold prices retreated sharply intraday after hitting two-week highs earlier in the day. Gold is trading over $3,300 right now. This highlights the precious metal’s volatility, as it tends to react sharply to wider market sentiments and economic indicators.
In the currency markets, GBP/USD is trading a little above 1.3400. Market participants are looking forward to the release of the third major economy PMI data in the United States. Nevertheless, given this backdrop the GBP/USD pair would find it tough to follow up its weekly advance in a cautious market mood. According to analysts, the key driver was US economic releases which are expected to greatly influence the pair’s movement in the next few days.
Investors are buzzing with anticipation over the upcoming US PMI reports. This enthusiasm is symptomatic of their greater fear for the state of the U.S. economy. As market focus shifts towards these pivotal data releases, many are looking for signs of growth or contraction that could sway monetary policy decisions.