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Pound vulnerable to easing UK manufacturing PMI

business-articlesPound vulnerable to easing UK manufacturing PMI
  • Pound losses likely on weaker UK manufacturing growth

  • Eurozone manufacturing PMIs to offer little support to euro

  • Oil prices continue to influence Canadian dollar


Weaker UK manufacturing could reverse pound gains

After benefitting from a bout of Brexit-based optimism the pound looks vulnerable ahead of this morning’s UK manufacturing PMI.
Forecasts point towards the manufacturing sector losing further momentum in December, with the index easing from 53.1 to 52.5 on the month.
With a significant degree of uncertainty still hanging over the domestic outlook, any signs of economic weakness could weigh heavily on GBP exchange rates.
On the other hand, an upside surprise from the manufacturing sector may shore up the pound on hopes of a more resilient fourth quarter UK gross domestic product.

Euro support limited ahead of Eurozone manufacturing PMIs

The impact of December’s finalised Eurozone manufacturing PMIs could prove limited, with no change forecast from the initial readings.
However, the mood towards the single currency may sour on the back of Italy’s fresh manufacturing data.
Confirmation that the Italian manufacturing sector remained in a state of contraction at the end of 2018 is likely to dent EUR exchange rates this morning.
Any fresh signs of political tension within the Eurozone could also drag on the euro in the near future.

Oil price recovery could boost Canadian dollar

If oil prices continue to recover ground this could help shore up the Canadian dollar today, even in the face of wider market jitters.
Further volatility could be in store for CAD exchange rates in the wake of this afternoon’s Canadian manufacturing PMI.
Evidence of the Canadian economy continuing to lose momentum would further undermine the odds of the Bank of Canada (BOC) raising interest rates again in the near future, to the detriment of the Canadian dollar.
However, if the PMI betters forecast CAD exchange rates could find a fresh rallying point today.

Upcoming Data:

Wednesday, 2nd January 2019
09:00 EUR Eurozone Manufacturing PMI
09:30 GBP Manufacturing PMI
14:30 CAD Manufacturing PMI

Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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