GBP/USD is firm on the day and remains in bullish territory following two consecutive days of higher highs and lows. At the time of writing, GBP/USD is holding near 1.2500 in a tight 15-pip range. The Pound Sterling is riding the weakness in the US Dollar that was pressured after a plunge in US factory activity raised concerns over slowing economic growth.

Firstly, US manufacturing PMI fell in March to the lowest since May of 2020 and US factory orders declined for a second straight month, down 0.7% in February after falling 2.1% in January from the 1.7% jump in December. The Institute for Supply Management (ISM) reported yesterday that its Manufacturing PMI fell to 46.3 last month. This was the worst since May 2020, from 47.7 in February. 

Then, we had US Feb JOLTS job openings fall 630k to 9.93m, their lowest level since May 2021. ´´The ratio of job openings to unemployed fell to 1.67 vs 1.86, indicating some easing in demand for labour but still well off a balanced labour market,´´ analysts at ANZ Bank explained, adding, ´´the largest drop in openings was in professional and business services, followed by healthcare. Accommodation and food services, saw openings fall back to middle of 2022 levels. Construction job openings picked up despite the sector’s interest rate sensitivity.´´

This batch of data this week falls on the heels of last Friday´s PCE data, the Federal Reserve´s preferred inflation measure, that was also mixed and weighed on the greenback. However, while headline and core both came in a tick lower than expected, super core accelerated for a second straight month to 4.63% YoY which is the highest since October.  ´´This is not the direction that the Fed desires and so we look for the hawkish tilt in Fed comments to continue,´´ analysts at Brown Brothers Harriman explained. 

Nevertheless, markets viewed the reduction in job openings in the US as a sign that the Federal Reserve will be able to back off on its monetary policy tightening. Markets repriced the risk of a 25bp rate rise in May to 50% (from 70% prior to the release of the data).