GBP/USD snaps losses post US PMIs

The GBP/USD pair has snapped three successive weeks of losses and reclaims a fresh gain around 1.34%. The US S&P Global PMIs reading has flashed and renewed worries about current US economic conditions.

The US 2s-10s yield curve remains inverted for 14 consecutive days. The pair recaptures the 1.2000 figure amidst a fragile market sentiment, as equities are seesawing, due to US S&P Global PMI data, flashing a contraction in the services sector and its Composite index, while traders seek safety towards US Treasuries, with US bond yields falling, undermining the US dollar.

The GBP/USD is trading at 1.2028 after diving towards its daily low at around 1.1915. Nevertheless, the major bounced back and rallied towards a daily high at 1.2063 before stabilizing around current price levels.

The US S&P Global reported PMIs Indices for July. Manufacturing rose by 52.3, above expectations, but Services and Composite tumbled to 47 and 47.6, respectively, suggesting that the economy is deteriorating according to the survey.

The US Dollar Index, a basket of peers that measure the buck’s performance, slides 0.18%, sits at 106.407, while the US 10-year benchmark note coupon plunges ten bps to 2.789%.

Traders should be aware that the US 2s-10s yield curve remains inverted, at -0.174%, signaling an impending recession. Nonetheless, the US 3-month to 10-year yield curve bear flattened towards the 0.367% area, which, although positive, has erased since its peak in May at 2.350%, almost 200 bps.

On the UK front, UK Retail Sales contracted, showing the pressure of elevated prices in the UK. June sales dropped by -5.8% YoY, more than estimations, while the monthly reading shrank -0.1%, less than the -0.3% contraction estimated.