GBP/USD challenges the crucial 1.30 resistance on Friday fueled by optimism of the UK flash PMIs

A business survey on Friday announced the British factories to have expanded in February. The gain was branded the sharpest in the past 10 months despite the recent outbreak of Coronavirus in China and its disrupting impact on business operations.

On the other hand, the British services sector suggested a marginal slowdown in February but the PMI (Purchasing Managers’ Index) remained in expansion territory (reading above 50.0). The slowdown in the services sector was offset by the unexpected optimism of the flash manufacturing PMI.

UK Flash PMIs For February Versus The Analysts’ Estimates

IHS/Markit revealed the flash manufacturing PMI at 51.9 in February – its best in the past 10 months. The reading was capped at the neutral 50.0 in January while analysts were anticipating the index to fall back into contraction and print at 49.7 in February. The UK’s flash services PMI recorded at 53.3 in February (2-month low) as compared to 53.9 which was noted in January. Analysts had forecast the flash services PMI to drop slightly to 53.4 in February.

Friday’s data also announced the UK manufacturing output index at 52.8 in February versus January’s 50.1. February’s reading marked a 10-month high for the index. Lastly, the flash UK composite output index was printed at 53.3 in February that remained the same as in January.  

Britain’s PMIs came out stronger than that of Eurozone’s for the 2^nd month in a row. The economic data on Friday suggested that the 5^th largest economy of the world is set to hit its quarterly target of 0.2% economic growth following a significant slowdown noted in 2019.

Optimism Of The UK Flash PMIs Was Attributed To PM Johnson’s Victory In General Election

A PMI reading above 50 is considered as expansion in the respective sector while below 50 reading marks contraction. The optimism in February’s PMI data for the United Kingdom, as per the analysts, was largely attributed to PM Johnson’s victory in the UK’s general election on December 12^th that fast-tracked Brexit. With the UK in hopes of striking a broader trade deal with the EU within the current deadline of December 2020; a time period that many analysts see as insufficient, the macroeconomic scenario, however, continues to be uncertain in the UK.

Amidst the PMIs for France, Germany, Eurozone, and the UK, GBP/USD was seen celebrating in the forex market. The currency pair climbed from a daily low of around 1.2880 to a daily high of 1.2975. The pair is currently settling near the daily high to close the week at a positive note.