Flash estimates indicate a significant acceleration in the UK economy at the start of the year. The S&P Global Composite PMI expanded rapidly to 53.9 in January, up from December’s 51.4 and comfortably beating the market forecast of 51.7. This strong rise in overall business activity was driven by sharp growth across both the manufacturing and service sectors.
Specifically, the Services PMI climbed to 54.3, surpassing both the 51.7 estimate and the previous month’s reading of 51.4. The Manufacturing PMI also saw a solid jump, rising to 51.6 from the prior 50.6.
Impact on GBP/USD Despite the upbeat S&P Global PMI data released on Friday, the impact on the Pound Sterling (GBP) may be limited. Traders widely expect the Bank of England (BoE) to stick to a gradual easing path, even amid evidence of accelerating price pressures in December. This muted reaction mirrors the recent response to strong UK Retail Sales data. December’s retail report beat expectations across the board—with headline sales rising 0.4% MoM and core sales up 0.3% MoM—yet failed to significantly boost the GBP/USD pair.
Instead, GBP/USD may find support depending on US Dollar dynamics. The USD could weaken due to risk aversion driven by geopolitical tensions, following recent volatility regarding US President Donald Trump’s stance on Greenland and NATO.
Technical Outlook Technically, GBP/USD is inching lower around 1.3490 at the time of writing, following a gain of over 0.5% in the previous session. The pair may target the next resistance barrier at the three-month high of 1.3562. Immediate support lies at the nine-day Exponential Moving Average (EMA) of 1.3450, followed by the 50-day EMA at 1.3397.
