GBP to USD Exchange Rate softer following mixed US manufacturing data

The GBP/USD exchange rate softened slightly on Tuesday in a session largely dominated by manufacturing data.

The USA saw mixed data releases but that was enough to give the US Dollar the edge over a Pound which was weakened earlier in the session by weaker than forecast manufacturing data for the UK.

According to Markit’s Manufacturing Purchasing Managers Index, activity in the sector declined in March. The PMI came in at 55.5, down from the four-year high seen in February of 57.1. The March figure was unchanged from last week’s preliminary figure. A figure above 50 indicates expansion whereas one below means contraction.

“The survey indicates that factory output growth has picked up again after the weather related disruptions seen at the start of the year, presenting policy makers with an encouraging picture of a healthy good-producing sector,” said Markit’s chief economist Chris Williamson.

Another manufacturing report was released by the Institute for Supply Management. Its index rose to 53.7 in March, up from the 53.2 figure recorded in the previous month. The figure was weaker than economist expectations for an increase to 54. The data also showed that employment grew for a ninth consecutive month, but was at a lower rate than the previous month.

After the data was released the Dollar retained its losses against the Euro. The single currency was unable to push higher however due to the release of weak inflation data released on Monday.

Wednesday sees the release of the latest US factory orders data which should provide further signs to see if the US economy is shrugging off the impacts of the harsh winter weather.