• The Pound Sterling holds recovery to near 1.2450 on an upbeat preliminary S&P Global/CIPS PMI report for April.
• BoE Haskel wants to see more slack in labor demand to gain confidence that inflation will sustainably return to the 2% target.
• Weak US PMI for April weighed on the US Dollar.

The Pound Sterling (GBP) turns sideways at around 1.2450 against the US Dollar (USD) in Wednesday’s European session after bouncing back strongly from a five-month low at around 1.2300 earlier in the week. The GBP/USD pair capitalizes on strong United Kingdom preliminary PMI numbers for April and a steep correction in the US Dollar.

On Tuesday, the S&P Global/CIPS reported that new business volumes increased across the private sector as a whole in April. “The rate of growth was the strongest since May 2023, but the expansion was centred on the service economy as manufacturers saw a moderate downturn in order books.”

Strong new business volumes usually indicate an upbeat consumer spending outlook, which could boost inflationary pressures and allow the Bank of England (BoE) to delay interest-rate cuts. The scenario bodes well for the Pound Sterling.

The USD came under pressure after S&P Global surprisingly reported weak preliminary US PMI numbers for April. The Manufacturing PMI dropped below the 50.0 threshold, signalling a contraction in the sector, and the Services PMI fell sharply to 50.9. The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, attempted to establish firm footing near 105.70