The Pound climbs the most in seven weeks as manufacturing growth increases
02/Dec/2014 • Currency Updates•
A strong start to the week for Sterling saw the UK currency strengthen against both the Dollar and the Euro. The Pound climbed 0.9% on greenback, the most in seven weeks, and 0.3% on the single currency during UK trading.
A relatively busy start to the week in the UK markets on Monday. The key announcement of the day concerned UK manufacturing which experienced a surprise increase in growth in November. The Manufacturing PMI released by Markit yielded a reading of 53.5, up 0.2 from October, hitting its highest level in four months. Weaker orders from overseas were offset by strong domestic demand according to the report, allowing the UK manufacturing sector to continue expanding at a solid level. Elsewhere, British consumers increased their borrowing at the fastest rate since July 2006, as Consumer Credit data rose significantly above forecasts to £1.087B in October. However, the number of mortgages approved in October fell for a fourth straight month to 59,426, while Net Lending to Individuals was down from £2.7B in September to £2.6B in October.
More growth data from Markit today as the London based company releases the Construction PMI for November at 9:30am.
A day of weak data saw the Euro lose ground on Sterling, although the single currency was able to climb 0.6% against greenback.
Monday was a dismal day for data within the Eurozone as it was announced that the manufacturing sectors in Italy, France and Germany all contracted in November. Markit Manufacturing PMI for Germany was down to 49.5 while the same measure for France and Italy was just as worrisome, at 48.4 and 49.0 respectively. Overall Eurozone manufacturing growth stalled to 50.1, barely above the 50 level separating expansion from contraction, and its lowest level since July 2013. New orders fell at the fastest pace in nineteen months despite heavy price cutting.
A muted day in Europe today in terms of data releases with the only announcement of any note the Producer Price Index figures from Eurostat at 10am GMT.
The US Dollar weakened against its major peers yesterday, with all G10 currencies strengthening against the greenback during the course of the day. The US Dollar index finished trading 0.65% down having briefly touched an eight-and-a-half year high during Asian trading.
Unlike its European counterparts the US manufacturing sector remained strong, despite growth slowing slightly in November. The PMI measure released by the Institute of Supply management dipped to 58.7 from 59, although came in comfortably above forecast for last month, suggesting the world’s largest economy is rising above the global slowdown. Meanwhile, the gauge of prices paid in the US manufacturing sector slipped well below expectations to a two and a half year low of 44.5 to mark a mixed day for the US economy. The Dollar, however, declined yesterday amid speculation the currency may have risen too far, too fast.
A number of second-tier releases in the US, with most market volatility expected at the release of the construction spending data from the US Census Bureau at 3pm London time.
Rest of the world
Oil prices fell further during Asian trading on Monday, wreaking havoc among the world’s commodity currencies. Crude oil plummeted to below $69 a barrel for the first time in five years. The Russian Ruble went into free fall, weakening by as much as 6%, its greatest one-day decline since 1998, while the Nigerian Naira lost 3.2% of its value against the dollar. Elsewhere, the biggest climber of the day was the Norwegian Krone, which gained 1.8% on the Dollar during the day, having hit a five-and-a-half year low during Asian trading.