UK pound is struggling today, dropping as disappointing manufacturing data reduces confidence in the currency. Sterling would have struggled anyway, thanks to the general risk aversion today, but the news specifically out of the United Kingdom is adding its own layer of difficulty; indeed, even the euro is gaining against the pound.
The latest data show that manufacturing performance in the United Kingdom contracted a great deal in May. April’s PMI was at 50.5, and median projections were for a PMI of 49.7 in May. The real number, though, ended up being 45.9. Such a large and unexpected contraction had an immediate impact. UK pound is dropping against its major counterparts.
General risk aversion is, of course, playing its part. Chinese manufacturing disappointed as well, and, once again, the drama playing out in the eurozone is in high focus. An effective bank run has many worried about the banking sector in Spain, and nothing has been resolved as far as Greece is concerned. On top of that, there are still other countries on the periphery that are still of concern.
For now, it is no surprise that Forex traders prefer safe havens like the US dollar and the Japanese yen.
At 13:32 GMT GBP/USD is down to 1.5394 from the open at 1.5404. EUR/GBP is up to 0.8065 from the open at 0.8026. GBP/JPY is down to 120.6350 from the open at 120.6450.
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