The purchasing managers’ index for Britain’s manufacturing sector dropped to 57.1 points. Early expectations stood on a fall from 60.9 points (revised down from 61.5) to 60.7 points. The pound, that managed to settle above support in recent days, now falls.
The manufacturing sector in the UK is pushing the economy forward in recent months. With slumping construction and a very worrying slowdown in Britain’s large services sector, strong growth in manufacturing has manged to push the economy and also keep GBP/USD within range.
And now, this bad result is a huge disappointment. GBP/USD fell from 1.6080 to 1.6020. The move continues. Yes, the manufacturing sector continues growing – the score, above 50 points, means that more expansion is expected. But the pace of this growth has significantly slowed down. There are doubts that the manufacturing sector can indeed carry the weight.
Earlier in the week, cable fell on multiple worries, with the Irish banking crisis being the main driver for a weaker pound. GBP/USD fell below 1.60 but managed to hang on to a lower support line 1.5940.
A slightly better GDP figure, which showed that the British economy contracted by “only” 0.5% in Q4 didn’t really help either. But later on the pair managed to recover, but couldn’t settle above 1.6110. Higher resistance appears at 1.6280 – 1.63.
For more lines,analysis and events, see the British Pound forecast.