A 17 month low manufacturing PMI was the latest in a long line of dovish data for the pound to try and digest this Tuesday.
You have to feel a bit sorry for sterling. Back in mid-April it was riding high, hitting levels against the dollar not seen since before Brexit on the assumption that the Bank of England would be raising interest rates in May. Yet from that $1.435-crossing peak cable plunged more than 4%, closing April the wrong side of $1.38.
And things have only gotten worse at the start of May. April’s manufacturing PMI, which came in at 53.9 against the 54.8 forecast and the 54.9 seen in March, sent the pound down another 0.4% against the greenback, leaving it at a near 16 week nadir. Sterling was a bit more resilient against the euro, but even then it sat flat at €1.137, only just above Monday’s 6 week lows.
The FTSE, which a little bit of help from BP (LON:BP) and Just Eat (LON:JE), immediately benefited from the pound’s most recent dive. Jumping half a percent the UK index is once again teasing 7550, a level it couldn’t quite reach on Monday before being pulled back towards 7500.
Elsewhere the Dow Jones, fearful of the strengthening dollar, is set to drop another 70 points when the bell rings on Wall Street. That comes on top of Monday’s 150 point decline, the index struggling with a green greenback as it heads into Wednesday’s Fed meeting and Friday’s non-farm jobs report. As for today, the US has the Markit and ISM manufacturing PMIs to look forward to; the former is set to be confirmed at 56.5, an improvement on March’s 55.6, while the latter is expected to fall from 59.3 to 58.4.
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