The weakest link in the UK economy has just become weaker: the manufacturing sector is growing at a slower pace than expected: 51.6 points according to the manufacturing PMI for September. In addition, last month’s number has been revised down to 52.2 from 52.5 points.
GBP/USD is falling towards 1.6160, around 40 pips in the immediate response in the markets.
Markit’s manufacturing purchasing managers’ index for September carried expectations for a tick up to 52.6 points after 52.5 in August. This sector is the UK’s weakest link. The sensitive new orders component is especially weak, just above the break even figure of 50.
GBP/USD traded around 1.62 towards the publication.
This is the first of a series of 3 PMIs. Tomorrow we have the construction sector and on Friday the services PMI, which is the most important one given the size of the economy. These are forward looking indicators, but not always 100% correct.
The British pound has been one of the stronger currencies in the recent dollar storm. While it did lose ground to the greenback, it gained nicely against the euro and other currencies. The wobbles around the referendum in Scotland belong to the past.
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