GBP/USD softens to near 1.3500 on weaker UK PMI data

• GBP/USD loses traction to around 1.3510 in Wednesday's early European session.
• UK S&P Global Composite PMI declined to 51.0 in September, weaker than expected. 
• Fed's Powell signaled central bank to move slowly on interest rate reductions.

The GBP/USD pair loses ground to near 1.3510 during the early European session on Wednesday. The Pound Sterling (GBP) weakens against the US Dollar (USD) on downbeat UK S&P Global Purchasing Managers' Index (PMI) data for September. The Bank of England (BoE) External Member Megan Greece is set to speak later on Wednesday. 

Economic activity in the UK's private sector expanded at a softer pace in September than in August, with the S&P Global Composite PMI declining to 51 from 53.5. This figure came in worse than the estimations of 52.7. Additionally, the Manufacturing PMI eased to 46.2 in September from the previous reading of 47.0, while the Services PMI fell to 51.9 during the same period from 54.2. 

"September's flash UK PMI survey brought a litany of worrying news, including weakening growth, slumping overseas trade, worsening business confidence and further steep job losses," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

Federal Reserve (Fed) Chair Jerome Powell said on Tuesday that the US policymakers continue to deal with the double whammy of potentially higher inflation and a slowing labor market, calling it a "challenging situation." Powell stated that the interest rates are in a good place to deal with either threat, suggesting he sees no urgency to lower rates aggressively. Cautious remarks from Fed's Powell could lift the USD in the near term. 

Looking ahead, traders will keep an eye on the US Personal Consumption Expenditures (PCE) Price Index for August data later on Friday. In case of softer-than-expected inflation, this might exert some selling pressure on the USD.