British Pound Reverses Losses and Rallies on Positive Housing Data

The British pound today reversed its losses against the US dollar and rallied higher from the early European session following the release of positive UK housing data. The GBP/USD currency pair extended its rally into the mid-European session despite the release of disappointing UK Manufacturing PMI data by IHS Markit shortly thereafter.

The GDP/USD currency pair today rallied from a low of 1.3095 to a high of 1.3138 in the mid-European session.

The currency pair’s rally was initially triggered by the release of the UK Nationwide house price index early in the European session. The house price index came in at a monthly 0.6% versus the expected 0.1% translating into an annualized 2.5, which beat the consensus estimate of 1.8%. The pair experienced a slight pullback following the release of the Markit/CIPS UK Manufacturing PMI, which came in at 54.0 missing expectations by 0.2, but quickly reversed direction and headed higher.

Rob Dobson of Markit commented that:

UK manufacturing started the third quarter on a softer footing, with rates of expansion in output and new orders losing steam. The upturn in the sector has eased noticeably since the back-end of 2017, meaning that manufacturing has failed to provide any meaningful boost to headline GDP growth through the year-so-far.

The release of the US MBA mortgage applications data later in the session had a muted impact on the currency pair, which extended its gains.

The currency pair’s future performance is likely to be affected by the release of US ADP employment data, ISM Manufacturing data, and the FOMC rate decision.

The GBP/USD currency pair was trading at 1.3131 as at 11:52 GMT having rallied from a low of 1.3095. The GBP/JPY currency pair was trading at 146.92 having risen from a low of 146.53.

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