Sterling Tumbles as Manufacturing Sector Grinds Down
The Pound has begun to drop against both the Euro and the US Dollar following surprisingly poor data from the manufacturing sector this morning.
Sterling was trading at the mid-market rate of 1.2029 against the Euro and 1.5386 against the US Dollar at 10.45 am this morning.
Pound Sterling – UK Markets
The PMI manufacturing data is typically treated as an important indicator of UK economic health as it accounts for a large part of total GDP. The reading released this morning fell from 57.3 to 54.3 and the Pound is now close to five month lows against the Dollar.
British football clubs have also been in the headlines today suffering their own effects of a fragile economy with spending in the summer transfer window falling by 22 percent from last year. This has been attributed to a weaker pound and higher income tax.
US Dollar – US Markets
The Dollar has gained on the Pound but dropped against the Euro since yesterday. Yesterday provided a mixed bag of data. US consumer confidence picked up more than expected in August, but there was also a widely expected drop in business sentiment. The Case Shiller index which tracks house prices across twenty US cities revealed that house prices rose gradually throughout the second quarter at 4.4 percent. This rise however may be due to the flurry of activity ahead of June’s deadline for tax credits for buyers of existing homes. The published minutes of August’s FOMC meeting also dampened the mood by revealing conflicting views between Federal members on how to handle the slowing economy.
Today is a very heavy day for US data. Most importantly, ADP Employment figures for August are expected to show a net change of 20, 000 and ISM manufacturing data is expected to drop. This will pointedly highlight that the industry attributed to leading the US to recovery is now at the heart of the economic slow down.
Euro – European Markets
The Euro made some early gains on the US Dollar yesterday after Germany’s unemployment fell by 17, 000 in August.
This morning, German PMI Manufacturing data has come in as forecast and European PMI Manufacturing data has come in slightly higher than expected. The single currency is so far making gains on Sterling and the US Dollar.
Other Currencies – Highlights
Asian currencies have risen led by the Thai Baht on optimism linked to manufacturing and export growth. Chinese PMI data has also picked up.
Australian GDP has risen at 1.2 percent beating an expectation of 0.9 percent for the second quarter.
The Canadian Dollar has dropped to an eight week low against the US Dollar, showing its worst performance since June 2009, as a report showed the nation’s economy slowed more then forecast in the second quarter.
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