Stronger US Data Boosts Dollar as GBP/USD Falls to Weakest Level Since July

The GBP/USD exchange rate declined on Wednesday to its lowest level since late July as stronger US economic data reinforced expectations of further Federal Reserve tightening.

The US Dollar strengthened after S&P Global's flash composite PMI jumped to 58.4 in September from 56.0 in August, marking the strongest rate of private-sector expansion since July 2021.

The improvement was driven by strong growth across both services and manufacturing, while new orders increased sharply and hiring accelerated. However, the survey also showed that stronger demand was putting renewed pressure on capacity and supply chains, contributing to another rise in business costs and selling prices.

The data reinforced expectations that the Federal Reserve may need to tighten monetary policy further following last week's 25-basis-point interest-rate increase. US Treasury yields moved sharply higher after the release, with the 10-year yield climbing above 5% to its highest level since 2007.