Sterling was rejected at 1.3475 in the early trading session in London on Friday, and has retreated to session lows of the 1.3450 area at the time of writing. The pair turned negative on the daily chart after the downward revision of the December US$ global manufacturing PMI in the UK, but remains within the weekly range, above 1.3400.
UK manufacturing PMI figures released earlier on Friday revealed that sector activity grew at a slower pace than previously expected. The final reading was revised to 50.6 from the initial estimate of 51.2, but remains above the 50.0 level that separates growth from contraction levels, and also above the 50.2 level seen in November.
The dollar’s recovery attempts are still limited
The immediate trend is down from late December highs above 1.3530, but the pair is holding on to most of the gains of the November-December rally, and closes out 2025 up over 7%. US President Trump’s erratic trade policies, signs of an economic slowdown in the US, and political pressure on the Federal Reserve to cut interest rates have all weighed heavily on the US dollar over the past 12 months.
Looking ahead, the monetary policy paths of the Federal Reserve and the Bank of England are diverging. The Bank of England cut interest rates in December in a momentous decision, but high inflation levels and strong opposition within the Monetary Policy Committee virtually ignore any further policy easing move for the foreseeable future.
On the other hand, the Fed is expected to cut interest rates again at least in 2026. And perhaps beyond that if the US president replaces Jerome Powell as the more dovish Fed chairman, as he has repeatedly pledged. Unless the context changes significantly, this will likely keep the US dollar’s recovery attempts limited.
Economic indicator
S&P Global Manufacturing PMI
The Manufacturing Purchasing Managers’ Index (PMI) is released on a monthly basis by Standard & Poor’s Globalis a leading index that measures business activity in the UK manufacturing sector. Data are drawn from surveys of senior executives at private sector companies. Survey answers reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as GDP, industrial production, employment and inflation. The index ranges between 0 and 100, and levels of 50.0 indicate no change compared to the previous month. A reading above 50 indicates that the industrial economy is generally expanding, which is a bullish signal for the British pound. Meanwhile, a reading below 50 indicates that activity among commodity producers is generally declining, which is bearish for the pound.
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Latest version:
Friday 02 January 2026 at 09:30
repetition:
monthly
actual:
50.6
consensus:
51.2
former:
51.2
source:
Standard & Poor’s Global
Economic indicator
S&P Global Manufacturing PMI
the Standard & Poor’s Global The Manufacturing Purchasing Managers’ Index (PMI), released on a monthly basis, is a leading index that measures business activity in the manufacturing sector in the United States. Data are drawn from surveys of senior executives in private sector companies from the manufacturing sector. Survey answers reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as GDP, industrial production, employment and inflation. A reading above 50 indicates that the industrial economy is generally expanding, which is a bullish signal for the US dollar. Meanwhile, a reading below 50 indicates that activity in the manufacturing sector is generally declining, which is bearish for the US dollar.
Read more.
Next release:
Friday 02 January 2026 at 14:45
repetition:
monthly
consensus:
51.8
former:
51.8
source:
Standard & Poor’s Global
