Pound Sterling Falters vs EUR on Manufacturing Forecast

December 1, 2015 - Written by James Fuller

STORY LINK Pound Sterling Falters vs EUR on Manufacturing Forecast

Disappointing British Manufacturing Output Weighs on Sterling Demand Today

The Pound Sterling (currency : GBP) has put in a stuttering performance in the global FX markets during today’s session following some mildly disappointing UK data this morning.

The latest edition of the Markit Purchasing Managers Index survey of Britain’s ailing manufacturing sector revealed that the pace of output expansion in domestic factories slowed markedly from October’s showing of 55.2 to a relatively lowly 52.7 last month.

The result of above 50 indicates that the sector is still growing, but not at as rapid a pace as was previously the case.

Rob Dodson of Markit observed in a statement published earlier that, ‘while the improvement in recent months is a welcome trend, scratching beneath the surface of the manufacturing numbers stills exposes a number of weaknesses. Growth remains heavily focussed on the domestic consumer, while the strong gains at large-scale producers have yet to filter through to SMEs. A broadening of the expansion is necessary if the nascent recovery is to be sustained.’

Pound Sterling to Euro Exchange Rate Dipped into 1.4100's Today

Dodson's downbeat assessment of the current state of the UK economy was shared by many FX investors and Sterling lost ground across the board as a consequence, briefly sending the Pound euro exchange rate briefly back down into the 1.4100s GBP EUR during morning trading.

Positive European data Supports Single Currency Demand Today

Elsewhere, the early part of the European equities session brought a rare piece of positive economic data from the euroland.

Official data from Eurostat showed that the overall level of unemployment unexpectedly dipped from 10.8% to 10.7% in the euroland during October.

The figure suggests that the European Central Bank’s controversial Quantitative Easing programme is beginning to have the desired effect.

However, if the news spurs the ECB to announce an increase to QE on Thursday, then many analysts forecast the single currency will sink to new multi-year lows against Sterling before Christmas arrives.

A break into the 1.4500s would then be the next move for the pair.

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TAGS: Euro Forecasts Pound Euro Forecasts Pound Sterling Forecasts