Sterling knocked by UK Manufacturing PMI
Tuesday 2 July, 2019
Daily Currency UpdateGBP - British PoundOnce again, the UK posted negative data on Monday as UK Manufacturing PMI fell to 48 from 49.4 in the previous month. The UK PMI measures the performance of the manufacturing sector and is derived from a survey of 600 industrial companies. This data came in well below market expectations of 49.2 and is the steepest contraction in the manufacturing sector since February 2013. Further woes came for the British economy as labour data showed employment fell for the third straight month. GBP is still struggling against a number of its major peers and until the race for Prime Minister has concluded, chances are there won’t be much upside for the pound. There is significant resistance built into the 1.28 (GBP/USD) handle, so if the market moves past this psychological level, we expect a rally for the British currency. Eyes turn to UK Constructions PMI later on Tuesday.
Key MoversThe Aussie Dollar was the best performer on Monday among the G10 currencies as the Reserve Bank Australia cut rate to a historic low of 1%. The RBA governor, Philip Lowe claimed that Australia’s growth was “on trend” and that employment data was strong. The cut was expected by many however this didn’t mute the initial spike in AUD strength when the announcement was released. Since then, AUD has stayed fairly muted and the ASX 200 hovered near where it opened. Another rate cut is expected in Q4 2019 and a potential further cut in Q1 2020. Eyes turn to further escalations in the trade truce between US and China, after their ceasefire agreement at the G20 summit at the end of last week.
- GBP/EUR: 1.1108 - 1.1245 ▼
- GBP/USD: 1.2575 - 1.2705 ▼
- GBP/AUD: 1.7950 - 1.8160 ▼
- GBP/NZD: 1.8870 - 1.9090 ▼
- GBP/CAD: 1.6455 - 1.6630 ▲