Sterling slides as PMI figures point to growth slowdown

Published: 02 May, 2012

Sterling had a poor start to the day as Manufacturing Purchasing Managers' Index (PMI) figures came in worse than expected.

Currency rates - May 2

EURO/GBP - 1.2270

US$/GBP - 1.6219

CHF/GBP - 1.4749

CAN$/GBP - 1.5992

AUS$/GBP - 1.5692

ZAR/GBP - 12.546

JPY/GBP - 130.52

HKD/GBP - 12.579

NZD/GBP - 1.9908

SEK/GBP - 10.911

AED/GBP - 5.9632

US$/EURO - 1.3214

INR/GBP - 85.86

The figures underlined the negative sentiment from last week's GDP figures showing growth in the UK is slowing down. Sterling then recovered to some extent before dropping sharply as US economic data was released. The market will look towards the Construction PMI figures released today for further insight into the state of the economy.

The euro started the day strong against sterling following the UK's poor PMI reading; but, weakened against the majority of currencies following the US manufacturing PMI release. Trading volumes were fairly light with the majority of Europe closed for the Labour Day bank holiday yesterday. German and Eurozone unemployment data will be the main releases on the agenda today as Europe returns back to work; but, developments in Spain and a look ahead to the French elections could cause a lot of volatility.

The US dollar had a poor start to the day; but, strengthened on the news that the Institute for Supply Management (ISM) manufacturing PMI indices data released showed much better than expected figures increasing investor confidence in the world's largest economy. The unemployment data release will be the main news on the agenda today and will provide some direction to the expected figures for the highly influential Non-farm payrolls data released on Friday.

Elsewhere, the Australian dollar was weak against the majority of currencies following the Reserve Bank of Australia unexpectedly lowering the interest rate by 0.5% yesterday morning, with the New Zealand dollar trading in a fairly similar pattern. The commodity backed currencies strengthened in the afternoon as risk appetite returned to the market following the positive economic data released in the US. Chinese manufacturing PMI also came in just below market expectations. Swiss retail sales figures are released first thing and unemployment data from New Zealand will be released late this evening.

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