GBP/USD extends the downside toward 1.2700, focus on Fed Chair Powell's speech

• GBP/USD trades lower on the back of downbeat UK PMI data.
• UK Composite PMI fell below 50 for the first time since January.
• Weaker PMIs from both countries, flaring the likelihood of rate hikes in September meetings.

GBP/USD extends its losses and trades lower around 1.2710 during the Asian session on Thursday. The pair faces downward pressure due to downbeat preliminary PMI data released from the United Kingdom (UK) on Wednesday, which came in below expectations. The preliminary S&P Global/CIPS Composite PMI (Aug) reported a decline of 47.9 from the previous reporting of 50.8, weaker than the expectation of 50.3. The index fell below 50 for the first time since January.

However, US PMIs also fell short of the market consensus, which helped the GBP/USD pair in trimming the losses on the previous day. Additionally, the US Treasury yields fell sharply on weaker US economic data, exerting downward pressure on the Greenback.

As said, S&P Global Manufacturing PMI in August declined to the reading of 47, weaker than the market consensus of 49.3, from 49 prior. The S&P Global Services PMI for August dropped to 51 from the prior 52.3, falling short of the expected 52.2.

Weaker PMI data from both countries has signaled weaker economic activities, raising the market expectations of less likelihood of interest rate hikes in September meetings by the central banks. This put the market participants into cautious status, seeking further cues on the economic outlook and inflation scenarios.

The US Dollar Index (DXY), which measures the performance of the US Dollar (DXY) against the six major currencies, hovers around 103.40 at the time of writing. Investors turn cautious ahead of the upcoming Jackson Hole annual symposium, where Fed Chair Jerome Powell will deliver a speech on Friday.

Traders will likely monitor Initial Jobless Claims from the United States (US) scheduled to be released later in the day. On the UK docket, GfK Consumer Confidence for August is due to be released on Friday. These datasets might offer valuable perspectives about the economic condition of both countries, providing fresh cues for GBP/USD traders.