Mixed data out of the UK as PMI disappoints, markets await German figures today
02/May/2012 • Currency Updates•
The pound put in a meek showing in the currency markets yesterday, following the release of a disappointing PMI Manufacturing survey for April which came in below expectations. This highlighted the fragility of the UK economy and the risk of a strong currency denting export sales, causing sterling to back away from multi-month highs against a basket of currencies. Having said this, despite the recent mixed data signals from the UK, we have still seen short term support for the pound and losses yesterday were limited as it is still seen as a relative haven to the ailing euro and many analysts’ speculating that last week’s surprise GDP figures will be revised upwards.
The euro was somewhat suppressed yesterday, as investors price-in the possibility that Nicolas Sarkozy will no longer be the country’s President by the start of next week. It was further hampered by the news of poor PMI data from Ireland and the Netherlands yesterday morning. A flash PMI for the whole eurozone released last week showed manufacturing activity in the troubled currency union falling to a 34 month low. If this morning’s German unemployment data confirms that
the eurozone’s premier economic driving force is creaking under the pressure of supporting debt-laden peripheral states, then the second half of the week could bring more pain for the single currency.
The US dollar put in another relatively strong performance on the back of a surprise increase in manufacturing data released late yesterday. Both the US and China published strong manufacturing data results, easing fears of a slowdown in global growth. The Greenback also benefitted somewhat from Australia’s gloomy outlook yesterday after the Reserve Bank cut interest rates, allowing the dollar to hoover up safe haven support.