Pound Rallies Then Falls on Weak PMIs and Profit Taking

The pound today rallied briefly against the US dollar before falling to its daily lows as traders continued to take profits from the post-election rally. The GBP/USD currency pair was also affected by the weak PMI data released by Markit Economics in the London session and Brexit optimism.
The GBP/USD currency pair today rallied to a high of 1.3422 before falling to a low of 1.3321 in the American sessions and was trading near these lows at the time of writing.
The currency pair today inched higher during the Asian session before falling in the early London session. Despite today’s pullback, the cable has retained over half of the gains it made on Thursday following Boris Johnson‘s unexpected landslide win in the UK general election. The release of the flash Markit/CIPS UK Services PMI for December, which came in at 49 missing expectations set at 49.5. The flash UK Manufacturing PMI also disappointed by coming in at 47.4 versus the consensus estimate of 49.3. The pair’s losses were limited by investor optimism about Brexit and the continuity of the current market-oriented economy championed by the Conservative Party.
The pair’s fall was also facilitated by the spiked in the US Dollar Index following the release of the upbeat flash Markit US Services and Manufacturing PMIs both of which beat consensus estimates. The pair had a muted reaction to the release of the Bank of England‘s financial stability report at 17:00 GMT.
The currency pair’s future performance is likely to be affected by tomorrow’s UK jobs data and Brexit headlines.
The GBP/USD currency pair was trading at 1.3347 as at 19:08 GMT having fallen from a high of 1.3422. The GBP/JPY currency pair was trading at 146.28 having dropped from a high of 146.80.

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