Pound Falls As UK Manufacturing Activity Contracts Amid "Brexit" Concerns
03 Mai 2016 - 12:01PM
RTTF2
The pound declined against the other major currencies in
European deals on Tuesday, as the U.K. factory activity shrank
unexpectedly in April, for the first time in three years, signaling
that the manufacturing sector entered the second quarter on a poor
footing amid "Brexit" fears.
The Chartered Institute of Procurement & Supply Purchasing
Managers' Index for the manufacturing sector fell unexpectedly to
49.2 in April from a revised 50.7 in March, according to a survey
from Markit.
The measure was forecast to rise to 51.2 from March's originally
estimated value of 51. The reading fell below the critical
no-change mark of 50.0 for the first time since March 2013.
The currency was also weighed by falling European shares, as the
yen's continued strength, a firmer euro and weak manufacturing data
out of China sapped investors' appetite for risk.
The Caixin Manufacturing Purchasing Managers' Index contracted
further in April, with a PMI score of 49.4. This is down from 49.7
in March and missed forecasts for 49.8.
The pound showed mixed performance in Asian deals. While the
currency rose against the greenback and the franc, it declined
against the yen. Against the euro, it held steady.
Reversing from an early high of 156.15 against the yen, the
pound declined to more than a 2-week low of 154.69. On the
downside, 152.00 is likely seen as the next support level for the
pound.
The pound, having advanced to a 4-month high of 1.4770 against
the dollar at 4:00 am ET, fell to 1.4597. The pound is seen finding
support around the 1.44 mark.
The pound weakened to near a 2-week low of 1.3869 against the
Swiss franc, following an advance to 1.4041 at 2:25 am ET. Further
weakness may take the pound to a support around the 1.36
region.
Survey results from the State Secretariat for Economic Affairs
showed that Swiss consumer confidence eased slightly in April.
The consumer sentiment index fell marginally to -15 in April
from -14 in January. It was forecast to improve to -12.
The pound slid to 0.7912 against the European currency, its
lowest since April 20, off its prior high of 0.7842. Continuation
of the pound's downtrend may see it finding support around the 0.80
area.
Data from Eurostat showed that Eurozone producer prices
continued to decline in March but the pace of decrease was slower
than expected.
Producer prices fell 4.2 percent year-on-year in March, the same
pace of decline as seen in February. Prices were expected drop 4.6
percent.
Looking ahead, at 10:30 am ET, Federal Reserve Bank of Cleveland
President Loretta Mester speaks in a panel discussion titled
"Unconventional wisdom: How will unusual monetary policy affect
market liquidity" at the Atlanta Federal Reserve's Annual Financial
Markets Conference, in Amelia Island.
The Bank of Canada Governor Stephen Poloz speaks in a panel
discussion at the Milken Institute's Global Conference in Los
Angeles at 12:30 pm ET.
Euro vs Sterling (FX:EURGBP)
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