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Sterling Weakest on Forex After String of Bad PMIs

July 3, 2019 at 18:35 by Vladimir Vyun

10 pound notes on the background made of 20 pound notesThe Great Britain pound was the weakest major currency on the Forex market today. The main reason for that was the string of bad PMI reports, which led to concerns that Britain’s economic growth slowed in the second quarter of 2019.

The seasonally adjusted IHS Markit/CIPS UK Services PMI logged 50.2 in June, whereas market participants were counting on the same 51.0 reading as in May. The index hit the lowest level in three months. And while it was still showing expansion of the sector, the indicator was dangerously close to the 50.0 level of no-growth. With manufacturing and construction indices being disappointing as well, it looks like Britain’s economy is not in a good spot.

The Shop Price Index reported by British Retail Consortium showed a drop by 0.1% in June, year-over-yer. The report discussed negative repercussions of the potential hard Brexit:

A no deal Brexit would hinder retailers’ abilities to continue to contain prices, as checks and delays would raise the cost of doing business. The October 31st deadline also comes at the worst possible time for retail – the height of preparations for Christmas and Black Friday, which are peak trading periods, threatening to cause disruption for consumers and businesses, and making further stockpiling of goods almost impossible. It is vital that the next Prime Minister reaches a deal with the EU and avoids the cliff edge.

GBP/USD declined from 1.2592 to 1.2576 as of 18:33 GMT today, and its daily low was at 1.2556. EUR/GBP traded at 0.8968 after opening at 0.8961 and reaching the daily high of 0.8990. GBP/JPY slid from 135.82 to 135.61, and its session minimum was at 135.15.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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