The Pound fell by almost a cent.
The Pound fell by almost a cent this morning upon the announcement that the UK Manufacturing Purchasing Managers Index slipped into contraction during May. Sterling dropped from 1.2460 against the Euro to 1.2378 in the opening hours of the European session. The significant slide in Manufacturing PMI heightened anxiety surrounding GBP with investors already concerned after Deputy Governor of the Bank of England, Charlie Bean spoke explicitly about the prospect of more quantitative easing to the Eastern Daily Press yesterday: “We have the scope to do more asset purchases.” Sterling lost out on almost half a cent against the Euro, and also suffered losses to the majority of the major currencies following the foreboding statement.
The downward trending cable has continued its skydive with GBP/USD now trading in the region of 1.5295, which is perilously close to a 2-year low for the currency pair. After losing its nerve due to increased QE bets, downgraded GDP, and weak PMI’s, Sterling now finds itself floating 10 cents lower than at the beginning of May.
UK Manufacturing slowed at the fastest pace (now that’s an uninspiring oxymoron) for 3 years, falling from 50.2 to 45.9. However Britain was not the only nation to see their Manufacturing industry falter in May, the Eurozone suffered its worst month for 3 years and even global economic powerhouse China was subject to a 2-year low in Manufacturing PMI. The Euro fell to 1.2312 against the US Dollar on the news.
The Irish referendum yesterday on the EU fiscal compact is expected to show that 60% – of the 20% who turned up – of the country are in favour of putting through the new policies that will improve Eurozone integration but incur the cost of further austerity measures. This ought to be relatively good news for the single-currency but considering the catalogue of hazards that are on offer to the Eurozone investor reaction should remain muted, especially as the official results have not yet been announced.
British 10-year bond yields are forever falling; they have now reached 1.57%, suggesting that investors are still viewing the UK as a safe-haven from the Eurozone debt crisis despite weak economic stats appearing to betray this assumption.
The British Chambers of Commerce have lowered their growth predictions for the UK economy in 2012 from 0.6% to merely 0.1% growth. They have called for increased Central Bank stimulus to support the struggling British financial system, and their negative tones could have contributed to the Pound’s poor performance against the antipodean currencies. Sterling is down 1-cent on the Aussie Dollar and 2-cents on the Kiwi.
Data Released Today
Eurozone Purchasing Managers Index Manufacturing (May)
Purchasing Managers Index Manufacturing (May)
Eurozone Unemployment Rate (April)
Unemployment Rate (May)
Non-farm Payrolls (May)
ISM Manufacturing (May)
- Pound to Euro, US Dollar exchange rate: The Pound fell against the US Dollar yesterday after the headline CPI inflation figure for April was released at 3.0%.
- Foreign Exchange Rate Forecast – The Pound initially fell against the Euro exchange rate
- Foreign Currency Exchange Rate Forecast – The Pound fell against the Euro exchange rate
- Pound Sterling, the Euro and US Dollar exchange rate News – The Pound fell from the highest level in two months against the US Dollar
- Foreign Currency Exchange Rate Forecast – The Pound fell against the US Dollar