Sterling pared earlier gains against its US counterpart this morning after manufacturing growth in the UK came in below expectations.
The Purchasing Managers Index compiled by Markit and the Chartered Institute of Purchasing and Supply fell to a reading of 54.3 in August from a downwardly revised 56.9 the previous month. The latest reading was below even the lowest forecast from economists polled by Reuters and is the slowest pace of growth for manufacturing in nine months. The slowdown in manufacturing puts a dent in the UK recovery story, which has recently been surprising on the upside with better-than-expected GDP growth and retail sales. GBP/USD plunged 60 pips to $1.53350 following the release of the data, but has since recovered to $1.53880 after a rebound in equities improved risk appetite. However, sterling is still off the intra-day high of $1.5419 reached during Asian trading following better-than-expected growth in China’s manufacturing sector.
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