The pound is under pressure following the release of the final July UK manufacturing data. The S&P Global Manufacturing PMI declined from 52.5 in June to 51.9, reaching a four-month low and coming in below the preliminary estimate of 52.8.
Nevertheless, the underlying figures were more resilient than the headline reading suggested. Manufacturing output expanded at its fastest pace in almost two years, while new orders and export sales continued to rise. Employment was broadly unchanged, and input-cost inflation slowed to its lowest level since February. Small manufacturers reported a decline in output, while medium-sized and large companies continued to expand production.
Prolonged disruption in the Middle East and restrictions affecting the Strait of Hormuz could still increase energy, transportation and production costs, creating additional risks for the UK economy. Weaker growth combined with persistent inflation would complicate the Bank of England’s policy decisions rather than automatically forcing the regulator to abandon further tightening.
The pound had already faced similar pressure from weak domestic indicators in an earlier GBP/USD outlook.
US manufacturing activity, by contrast, strengthened in July. According to the Institute for Supply Management, the Manufacturing PMI rose from 53.3 to 55.6, its highest reading since May 2022. The final S&P Global Manufacturing PMI remained unchanged at 53.9.
The figures confirm that one of the main sectors of the US economy remains resilient, but they do not guarantee an imminent Federal Reserve rate increase. Inflation remains above the regulator’s 2.0% target, meaning that further monetary tightening cannot be ruled out if price pressure proves persistent.
New York Fed President John Williams recently said that inflation remained too high but appeared to have peaked and should gradually decline in the coming quarters. He expects it to return to the Federal Reserve’s target by 2028 and noted that the current monetary-policy stance is well positioned to achieve that goal. Future decisions will continue to depend on incoming data and changes in the economic outlook.
Support and Resistance Levels
The trading instrument is testing the upper boundary of the descending channel. A breakout above 1.3488, the Murrey [5/8] level, could allow the pair to leave the channel and advance toward 1.3671, the Murrey [8/8] level, followed by 1.3793, the Murrey [+2/8] level, and 1.3870, the area of the yearly highs.
However, if the price consolidates below the middle Bollinger Band at 1.3395, a decline toward 1.3183, the Murrey [0/8] level, 1.3061, the Murrey [–2/8] level, and 1.2939, the Murrey [2/8] level on the weekly chart, could follow.
Technical indicators do not provide a unified signal. The Bollinger Bands are turning upward, the MACD histogram remains close to the zero line with limited momentum, while the Stochastic Oscillator has entered the overbought zone and is attempting to reverse downward.
Resistance levels: 1.3488, 1.3671, 1.3793, 1.3870.
Support levels: 1.3395, 1.3183, 1.3061, 1.2939.
GBP/USD Trading Scenarios and Price Forecast
Short positions may be opened below 1.3395 with targets at 1.3183, 1.3061 and 1.2939 and a stop-loss at 1.3465. Time horizon: 5–7 days.
Long positions may be opened above 1.3488 with targets at 1.3671, 1.3793 and 1.3870 and a stop-loss at 1.3400.
