Search ForexCrunch

Markit’s manufacturing purchasing managers’ index dropped to 55.9 points in September. This is below 56.7 seen in August and 56.3 expected.

GBP/USD was already sliding and extends its falls. The low so far has been 1.3301. Pound/dollar is hesitating ahead of the round number. Further support awaits at 1.3270. This is followed by 1.3230. The pair has lost a large part of the gains related to the expectations for a rate hike in November.

The drop in the indicator may be related to the recent strengthening of the pound. The higher exchange rate makes manufactured goods less attractive.

The UK government is still in crisis, with PM Theresa May facing a potential leadership challenge. Foreign minister Boris Johnson seems to undermine the PM.

The US dollar is on the rise on hopes that the tax reform will pass. The mood in markets has deteriorated following the violence in Catalonia and the shooting in Las Vegas, which left at least 20 dead.

Here is the GBP/USD chart, showing the deterioration.