August 24, 2022 12:06 AM ET
By: AnalysisWatch
The GBP/USD pair is trading lower near 1.1800 on Wednesday morning in Europe after a failed attempt to recover from the previous day's annual low. In doing so, the currency pair is tracking the strength of the U.S. dollar while paying a bit of attention to the market's hawkish bets on the Bank of England's (BOE) next move.
It is worth noting that preliminary readings for the UK's August PMI came in mixed, with the manufacturing index dropping to 46.00 from 51.1 expected and 52.1 in July, while the services PMI improved to 52.5 from 52.0 expected and 52.6 in July.
In addition, the latest results from the Confederation of British Industry (CBI) survey of UK manufacturing trends showed that the manufacturing order book balance fell to -7 in August, the first negative reading since April 2021, compared to +8 in July and +3 market expectations.
On the other hand, traders of federal funds futures put the probability of a 75 basis point (bp) rate hike at the Fed's meeting next month at 52.5%. Reuters reported that on Monday, the probability of a 50 basis point hike in September was slightly higher than the tying.
On Tuesday, preliminary results for the S&P Global manufacturing PMI for August fell to 51.3 from 52.0 expected and 52.2 previously, while the services index fell to 44.1 from 47.3, while the market expected 49.2. According to S&P Global, the U.S. economy is also struggling as the composite PMI fell to 45, its lowest level in 27 months. In addition, U.S. new home sales fell to a six-year low in July, dropping to 0.511 million from 0.585 million the previous month and market expectations. In addition, the Richmond Fed's U.S. manufacturing index for August fell to -8.0 from the previous reading of 0.0.
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