The British Pound (GBP) is maintaining slight gains on Monday amid thin trading volumes due to US markets being closed for Labor Day. The UK market saw the release of the S&P Global/CIPS Purchasing Managers Index (PMI) for the manufacturing sector, which met expectations at 52.5.
On the other hand, the US Dollar Index (DXY) is rebounding from a recent selloff, driven by strong US economic data. The focus is now on upcoming PMI data and US Jobs reports to determine the potential size of the interest rate cut by the US Federal Reserve in September.
Key Market Insights for Today
- UK Manufacturing PMI remains steady at 52.5 in August.
- US markets are closed for Labor Day.
- CME Fedwatch Tool indicates a 69.0% chance of a 25 basis points interest rate cut by the Fed in September.
- Markets expect no rate cut by the Bank of England in September but predict a 25 basis points cut in November.
- US 10-year benchmark rate holds at 3.90%, while UK 10-year Gilt Benchmark trades at 4.06%.
- European equities are in the red, with the FTSE 100 showing minimal losses.
GBP/USD Technical Analysis
The British Pound is trading at high levels against the US Dollar, with potential support levels at 1.3120, 1.3044, and 1.2869 in case of a downside movement. Traders eye a retest of the year-to-date high near 1.3237 or a fresh high at 1.33.
UK Gilt Yields FAQs
- UK Gilt Yields measure the annual return from holding UK government bonds.
- Factors influencing Gilt yields include interest rates, economic strength, liquidity, and currency value.
- Interest rates set by the Bank of England have a significant impact on Gilt yields.
- Inflation, exchange-rate risk, and global demand also affect Gilt yields.
Understanding these key market insights and technical analysis can help investors make informed decisions about their investment strategies in the current economic climate.