Despite an optimistic start to the day, the Pound to Euro (GBP/EUR) and Pound to US Dollar (GBP/USD) exchange rates both slipped in Monday afternoon trading.
UK Manufacturing Data does Little to Help Pound Exchange Rate
The UK’s November Manufacturing Purchasing Managers’ Index (PMI) showed an upswing from 51.1 to 53.1, but when analysts looked closer at the data they saw problems with the upswing. The increase was attributed to companies stockpiling products in case Brexit causes trade disruption. Additionally, new orders from international parties contracted for the second consecutive month in November. Two months in a row haven’t contracted since 2016.
IHS Markit Director Rob Dobson commented on the data, saying:
‘While demand from the domestic market was a positive spur, in some cases as clients built up stocks in response to Brexit and other supply-chain uncertainties, manufacturers also reported a further decrease in new export business as slower global economic growth and Brexit worries took a bite out of foreign demand. Brexit worries also increasingly dominated the outlook for the sector. Although still forecasting growth for the year ahead, manufacturers’ confidence fell to its lowest ebb since August 2016.’
Europe is also experiencing a lacklustre manufacturing sector. The Eurozone Manufacturing PMI sank to 51.8 in November from October’s 52.0, and registered the softest growth since 2016. Italy took the title for worst-performer, with its own Manufacturing PMI coming in at only 48.6, firmly in contraction territory and a 47-month low. France remained only just above the 50.0 mark which separates expansion from contraction at 50.8, a 26-month low, while Eurozone powerhouse Germany came in at 51.8, a 31-month low.
Meanwhile, markets cheered the weekend’s developments at the G20 summit between the US and China. The two nations’ Presidents reached a 90-day truce over the weekend which allowed higher-risk assets to climb as risk appetite strengthened. However, as US markets opened the Pound slipped against the US Dollar (GBP/USD).
Industry expert Nick Payne commented:
‘The very fact that both sides have reopened dialogue is a good step forward and should help sentiment and asset prices in emerging markets. Of course, hard yards lie ahead in reaching a comprehensive agreement, but for now, both sides can claim a “win”. US consumers can cheer that their manufactured-in-China favourites like iPhones will not be increasing in price for Christmas.’
Today’s GBP/EUR, GBP/USD Interbank Exchange Rates
The Pound to Euro (GBP/EUR) exchange rate resides at 1.1217. The Pound to US Dollar (GBP/USD) exchange rate is trading at 1.2723.