GBP/USD rallies despite UK business activity contraction

The GBP/USD pair has rallied from a daily low of 1.2037 to trade at 1.2144 at the time of writing, despite UK Services PMI and Composite figures indicating a contraction in business activity. The US ADP Employment Change report and ISM Non-Manufacturing PMI reveal a slowdown in private sector hiring and service sector activity, respectively.

Despite the lack of supportive UK economic data, the GBP finds support amidst a generally weakening US Dollar and positive market sentiment. The Pound Sterling rallies against the US Dollar, reaching 1.2135, as the Greenback’s overall weakness and upbeat market sentiment overshadow uninspiring UK economic figures.

The latest UK economic docket showed that business activity slightly improved, while the Services PMI and Composite figures jumped but remained below the 50 expansion/contraction threshold, indicating that consumer spending is shrinking. In the United States, private sector hiring slowed in September, with a gain of 89,000 jobs, below the estimated 153,000 jobs and declining from August 177,000.

The ISM Non-Manufacturing PMI reported a business activity index of 53.6 in the services sector for September, which was as expected but decreased from the previous month’s reading of 54.5.