British Pound Sterling | Currency News Views and Outlook
Exchange rates today: "We are all in this together" - How the Eurozone is conspiring against the UK economy and the pound sterling
- Category: British Pound Sterling
- Published on Wednesday, 01 August 2012 09:58
- Written by Sam Coventry
"Overall, a dismal set of PMI data. The index had already suffered a deterioration in early summer and whilst any 'Olympics boost' was unlikely in the manufacturing sector, a slump on this scale was not expected" - RBS.
Sterling is having a rough day today - the UK currency is over half a percent lower against the Australian dollar at 1.4842, the US dollar is also advancing, GBP-USD is 0.25 for the better at 1.5638.
The sterling to euro currency pairing is 0.24 pct in the red at 1.2707.
That the pound has fallen against the euro is notable, considering the Eurozone is behind the latest distressing eco-stats to come out of the UK economy.
It was this morning shown that UK Manufacturing PMI numbers slumped to 45.4 in July from 48.4 in June, way below City expectations for 48.4.
RBS are placing the blame squarely at the doors of the Eurozone:
"The fall in July brings the level of the UK PMI more into line with its euro area equivalent (44.0) contagion from across the Channel is implied by the sharper deterioration in the export orders balance (41.1 from 47.8) than in total orders. We're all in this together."
These figures are likely to prompt action at the Bank of England. An interest rate cut announcement for tomorrow appears to be priced in by investors who are selling off the UK currency in anticipation.
And further quantitative easing measures could also be due towards the end of the year as investors resign themselves to another poor quarter:
"Overall, a dismal set of PMI data. The index had already suffered a deterioration in early summer and whilst any 'Olympics boost' was unlikely in the manufacturing sector, a slump on this scale was not expected.
"It may simply be that the disruption around the Jubilee and the Olympics has had a bigger, temporary impact on manufacturers disrupting supply chains and staff working hours; and firms may have used this point in the calendar to undertake plant maintenance work.
"Nevertheless, the PMI is languishing at 3-year lows and is 5+ points below stabilisation levels, so there is a lot of ground to recover. Alongside distinctly underwhelming anecdotal evidence from consumer-facing parts of the economy, this bodes ill for hopes of a rebound in Q3 GDP."