Sterling Pound Declines on Weak UK Manufacturing PMI

The Sterling pound today declined significantly against the US dollar following the release of the Markit/CIPS UK Manufacturing PMI in the early European session. The pound’s decline was further accelerated by the US dollar’s recovery as it extended its gains at the start of the new month.
The GBP/USD currency pair lost over 100 points to decline from an opening high of 1.3773 to trade at a low of 1.3667 at the time of writing.
The currency pair’s decline begun in the Asian session and accelerated in the early European session following the release of the Markit UK Manufacturing PMI data. The manufacturing PMI came in at 53.9, which was lower than the expected 54.8, triggering the massive drop. The release of the UK money and credit report for March by the Bank of England also contributed to the pair’s decline. According to the report, broad money decreased by £0.9 billion in March. Within this, the flow of households’ M4 was £4.7 billion, above the recent average of £2.3 billion. The flow of private non-financial corporations’ (PNFCs’) M4 was -£0.5 billion. Mortgage approvals were broadly unchanged on the month, while approvals for house purchases were slightly lower at 62,91.
The weak releases from the UK docket pushed the pound lower as investors interpreted the news as a sign that the BoE’s Monetary Policy Committee might not hike rates during its May meeting.
The currency pair’s short-term performance is likely to be affected by the release of the US ISM Manufacturing and Employment reports later today.
The GBP/USD currency pair was trading at 1.3691 as at 10:06 GMT having declined from a high of 1.3773. The GBP/JPY currency pair was trading at 150.15 having dropped from a high of 150.63.

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