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Pound Slides As UK Manufacturing PMI Rises Less-than-expected

Alliance News

BRUSSELS ( Alliance News ) - The British currency weakened against its key counterparts in the early European session on Friday after data showed that UK's manufacturing activity expanded at a slower than expected rate in July.

Data from the Markit Economics and the Chartered Institute of Purchasing and Logistics , or CIPS, showed that UK's manufacturing activity expanded at a slower than expected rate in July as growth in output and new orders slowed.

The Makit/CIPS manufacturing purchasing managers' index, or PMI, decreased to 55.4 in July from 57.2 in June, but remained above the survey average of 51.5. Economists expected the index to come in at 57.2.

This marked the seventeenth consecutive month of expansion in activity. A reading above 50 indicates expansion by the manufacturing sector.

Manufacturing production continued to increase in July, though the rate of increase slipped to its lowest in over a year. New orders also continued to improve but at a slower rate than in June. Staffing levels rose for the fifteenth successive month in July. However, the rate of increase slowed to a nine month low.

The pound fell to nearly a 2-month low of 1.6827 against the US dollar, from an early high of 1.6892. At yesterday's close, the pound was trading at 1.6882 against the greenback.If the pound extends its downtrend, it is likely to find support around the 1.67 zone.

The pound, which closed yesterday's deals at 1.5341 against the Swiss franc, fell to more than a 2-week low of 1.5278. This may be compared to an early high of 1.5353. If the pound continues slide, it may find support around the 1.51 area.

Against the euro, the pound dropped to more than a 2-week low of 0.7958 from an early high of 0.7924. The pair was quoted at 0.7924 at yesterday's close. The pound may test support near the 0.80 zone.

Data from Markit Economics showed that Eurozone manufacturing activity growth remained stable at June's seven-month low. The final seasonally adjusted manufacturing Purchasing Managers' Index came in at 51.8 in July, unchanged from June. The flash score for July was 51.9.

Pulling away from an early high of 173.98 against the yen, the pound fell to a 2-day low of 173.20. The pair closed Thursday's deals at 173.53. Continuation of bearish trend may lead the pound to a support around the 172.50 mark.

Bank of Japan Governor Haruhiko Kuroda said in his speech today that positive turnaround in the three areas of financial conditions, expectations and economic activity brought about by the introduction of quantitative and qualitative easing has positioned the Japanese economy on track to achieve the 2% price stability target, as expected.

Looking ahead, US jobs data for July, construction spending, personal income and spending data for June, Markit's final manufacturing PMI and ISM manufacturing index for July are due to be released in the New York session.

Copyright RTT News/dpa-AFX
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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