The Pound softened against the US Dollar and remained little changed against the Euro after data showed that manufacturing activity in the United Kingdom expanded at a slower rate than forecast in December, casting some doubt on the nation’s economic strength.
According to the market research group Markit’s PMI data, UK manufacturing output fell to a seasonally adjusted level of 57.3 in December, a slowdown from the 58.1 recorded in November. The figure was worse than expected as economists had been expecting manufacturing output to tick lower to 58.0. Any losses are likely to be short lived.
“December’s number was still the second strongest since February 2011 with the production and new orders components hitting fresh record highs. Jobs growth remained strong on the back of stronger demand from both domestic and export markets. All in all the report confirms what we knew for a long time; the UK economy has entered 2014 at a very decent clip,” said the chief economist at World First.
Any figure below 50 indicates a contraction; any figure above 50 indicates expansion.
The Pound softened against the US Dollar following the data release but was able to remain above the 1.20 mark against the Euro after positive manufacturing data out of the Eurozone was dented by a disappointing figure out of the regions second largest economy, France.
In the Euro zone, Markit said its final manufacturing PMI for the single currency bloc remained unchanged at 52.7 last month, in line with expectations.
The US Dollar continued to receive support from data released on Tuesday which showed that consumer confidence in the world’s largest economy improved to 78.1 in December, beating expectations for a rise to 76.
The strong report added to expectations for further stimulus tapering by the Federal Reserve. The U.S. Central Bank will begin cutting the stimulus program by $10 billion a month in January, amid indications of an improving U.S. economy.
Sterling is likely to regain any lost ground on Friday as expectations are high that the due housing data will come in strongly. Friday also sees the publication of UK construction PMI data which is forecast to show improvement.
Current Pound Sterling (GBP) Exchange Rates:
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6545
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.2048
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.8598
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 2.0192
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6042
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8297
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5375
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.4948
(As of 10:00 am GMT)
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