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Pound exchange rate falls despite strong data
Published: 2 Jul at 10 AM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Australian Dollar Exchange Rate, New Zealand Dollar Exchange Rate, Euro Crisis, UK, Inflation,
The pound fell against the majority of the 16 most actively traded currencies yesterday despite the publication of the strongest UK manufacturing activity data in over two years.
The Markit/CIPS Purchasing Managers’ Index (PMI) for the British manufacturing sector climbed to 52.5 from a revised level of 51.2 in May to reach its highest level since May 2011.
Rob Dobson, Senior Economist at Markit, said the survey suggests that factory output climbed by about 0.5% in the three months to June this year.
Dobson said “The near-term outlook for output also remains on the upside, as above-trend sales growth depleted inventories that manufacturers will need to rebuild later in the year. Taken with recent signs of service sector strength and a stabilising construction industry it paints a picture of UK economic growth picking up from the opening quarter’s 0.3% to at least 0.5%. It therefore seems increasingly unlikely that the Bank of England’s policymakers will opt for further asset purchases at its meeting later this week.”
Dr Howard Archer, Chief European & UK Economist at IHS is sticking by his belief that the Bank of England, under the governorship of Mark Carney for the first time yesterday will continue to loosen policy, possibly by increasing its asset purchasing Quantitative Easing budget by £25 billion as soon as August when the Bank’s latest quarterly inflation report is due.
The euro managed to strengthen despite the release of data showing that unemployment in the euro zone continued to rise in May. The seasonally adjusted unemployment rate for the euro zone rose from 12% to 12.1%.
Thursday sees the latest policy announcements from both the Bank of England and the European Central Bank.
In the US, the dollar rose after the publication of upbeat manufacturing data gave the equity markets a strong start to this year’s third quarter by increasing risk appetite which also strengthened the high yielding commodity currencies like the Australian and New Zealand dollars.
The Institute for Supply Management (ISM) showed manufacturing activity in the US increased from 49 in May to 50.9 in June from 49 the previous month, indicating an expanding sector.
Overnight, the Reserve Bank of Australia kept interest rates unchanged at the record low of 2.75% as widely expected.
The Markit/CIPS Purchasing Managers’ Index (PMI) for the British manufacturing sector climbed to 52.5 from a revised level of 51.2 in May to reach its highest level since May 2011.
Rob Dobson, Senior Economist at Markit, said the survey suggests that factory output climbed by about 0.5% in the three months to June this year.
Dobson said “The near-term outlook for output also remains on the upside, as above-trend sales growth depleted inventories that manufacturers will need to rebuild later in the year. Taken with recent signs of service sector strength and a stabilising construction industry it paints a picture of UK economic growth picking up from the opening quarter’s 0.3% to at least 0.5%. It therefore seems increasingly unlikely that the Bank of England’s policymakers will opt for further asset purchases at its meeting later this week.”
Dr Howard Archer, Chief European & UK Economist at IHS is sticking by his belief that the Bank of England, under the governorship of Mark Carney for the first time yesterday will continue to loosen policy, possibly by increasing its asset purchasing Quantitative Easing budget by £25 billion as soon as August when the Bank’s latest quarterly inflation report is due.
The euro managed to strengthen despite the release of data showing that unemployment in the euro zone continued to rise in May. The seasonally adjusted unemployment rate for the euro zone rose from 12% to 12.1%.
Thursday sees the latest policy announcements from both the Bank of England and the European Central Bank.
In the US, the dollar rose after the publication of upbeat manufacturing data gave the equity markets a strong start to this year’s third quarter by increasing risk appetite which also strengthened the high yielding commodity currencies like the Australian and New Zealand dollars.
The Institute for Supply Management (ISM) showed manufacturing activity in the US increased from 49 in May to 50.9 in June from 49 the previous month, indicating an expanding sector.
Overnight, the Reserve Bank of Australia kept interest rates unchanged at the record low of 2.75% as widely expected.
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Source: moneytransfer.co.uk