04/10/16 - Sterling Under Further Pressure Despite Positive PMI Figures

GBP

UK manufacturing activity grew at the fastest pace in more than two years in September, as the weak pound helped the sector to cement its strongest quarter of growth this year, according to a closely watched survey. Economists said the better-than-expected data strengthened the case for the Bank of England to keep interest rates on hold in November, as several upgraded their UK growth forecasts. The Markit manufacturing  Purchasing Managers' Index (PMI) rose to 55.4 in September, from 52.1 in August. Economists had expected the headline reading to moderate to 52.1 following a significant rebound in activity in August from July's three-year low. The weak exchange rate drove  new orders higher from Asia, Europe, and the USA.

 

USD

In the US Markits’s  PMI manufacturing  fell to a three-month low of 51.5 in September from 52.0 in August. This was slightly above the flash estimate of 51.4. Chief business economist at IHS Markit, said: “Manufacturing growth slowed to a crawl in September, suggesting the economy is stuck in a soft-patch amid widespread uncertainty in the lead up to the presidential election". The survey saw firms pulling back on expanding production and focusing instead on cost-cutting, as inflows of new business slowed to the weakest seen so far this year.
 

EUR

Manufacturing activity in the euro zone picked up last month as demand increased from both within and outside the areas, pushing factories to increase employee headcount. The improvement remained uneven and was centered on Germany and its neighbours. Growth was far weaker than earlier in the year in Spain, Italy and Ireland, while manufacturing in France continued to decline. Markit's Manufacturing Purchasing Managers' Index for the bloc rose to 52.6 in September from 51.7 in August.
 

Key Announcements

09:30 - GBP: UK PMI Construction ( Sept) expected to fall to 49.0 from 49.2

10:00 - EUR: Eurozone Producer Price Index (Aug) expected to remain unchanged at 0.1%