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GBP Manufacturing PMI Came Strong, but Not Enough to Help the Pound
The British Manufacturing PMI published today signaled a continuous expansion in U.K. manufacturing. The survey was sent to 600 purchasing managers who were requested to rate business conditions such as employment, production, new orders, prices, suppliers, deliveries and inventories.
Any result above 50 is usually good for the currency. Sterling was expected to make gains against its major counterparts following the report. However, the opposite was true following the release and throughout the day. GBP fell low against the US Dollar.
Investors are not yet sure if the strong manufacturing PMI figure is a sign of recovery. Furthermore, manufacturers reported that higher commodity and energy prices are placing pressure on their own costs.
There are also fears that the GBP might experience selling pressure, largely due to high government deficits. The UK does not have the European Union safety net as in the case of Greece. Moreover, the upcoming general UK election, and its potential impact on the nation’s economy, are adding to investor uncertainty.
The British Pound fell more than 2% against the U.S. Dollar to its biggest one-day drop in a year. The pound hit $1.4781 earlier today, but gained back some of its losses during afternoon trading. Currently the GBP/USD is trading at around the 1.4980 level.
