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British Pound Rattled By Poor Manufacturing PMI Data

British Pound Rattled By Poor Manufacturing PMI Data

2017-04-03 08:58:00
Oliver Morrison, Analyst
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Talking Points:

- UK manufacturing PMI unexpectedly falls to a four-month low in March.

- Consumer goods producers suffer the sharpest slowdown.

- Pound falls versus Dollar and Euro.

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The British Pound has dipped after the UK manufacturing PMI unexpectedly fell to a four-month low of 54.2 in March, down from 54.6 in February, missing estimates of a rise to 55.

Data firm Markit reported that consumer goods producers suffered the sharpest slowdown, with growth little higher than in February. Firms also reported another rise in input costs, as inflationary pressures one more hit the sector, although they did also keep hiring staff.

On the whole the data suggest slower, but still positive, growth in manufacturing production. Rob Dobson, Senior Economist at IHS Markit, said a weaker trend in the UK’s manufacturing sector looks likely to continue.

“The survey data suggest that the goods-producing sector made a solid contribution to GDP during the opening quarter of 2017. However, it’s clear that the expansion will be less than the buoyant 1.3% rise seen in the fourth quarter of last year.

“With growth losing further momentum in March, that weaker trend is likely to continue into the second quarter. The latest survey also clearly shows that high costs and weak wage growth are sapping the strength of consumers, with rates of expansion in output and new orders for these products slowing further."

After posting an impressive comeback last week as the Brexit process was finally triggered, the British Pound was knocked back by the data this morning.

Here’s the drop versus the Dollar.

GBPUSD 15-Minute Chart (Intraday April 03, 2017)

British Pound Rattled By Poor Manufacturing PMI Data

Chart by IG

And here’s the Euro gaining on Sterling in the wake of the weak data.

EURGBP 15-Minute Chart (Intraday April 03, 2017)

British Pound Rattled By Poor Manufacturing PMI Data

Chart by IG

--- Written by Oliver Morrison, Analyst

To contact Oliver, email him at oliver.morrison@ig.com

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