Summary:
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UK release first ever flash PMIs
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Both manufacturing and services readings miss
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GBPUSD falls beneath $1.29 handle
The pound has fallen lower following the release of the first ever flash PMI readings for the UK which showed a contracting level of activity for both the manufacturing and services sector. These readings are intended to give an early look into the performance of these sectors in the current month and are in addition to the final readings which will be released at the start of December.
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PMI readings for the UK continue to flash warning signs with the first look at the November prints for both manufacturing and services both firmly in contractionary territory. Source: XTB Macrobond
The data for November was as follows:
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UK Flash Manufacturing PMI: 48.3 vs 48.8 forecast. 49.6 prior
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UK Flash Services PMI: 48.6 vs 50.1 forecast. 50.0 prior
Both these readings are clear disappointments and in coming in firmly below the 50 mark indicate both of these are in contractionary territory. Looking under the hood we can see further signs for concern, with drops in output and new orders and while this could be explained away due to the heightened political uncertainty ahead of next month’s election there is little doubting the fact that the UK economy has pretty much ground to a halt.
While these data points are released sooner than the final readings and therefore will be less accurate, the methodology used to compute them means they are comparable. Going forward they could well begin to take on greater importance in terms of market moves, as traders react rapidly to the first look at the data - similar to what we see with the GDP numbers. There’s been a clear adverse reaction seen in the pound to the release, with the GBP/USD rate falling by around 50 pips to trade back below the $1.29 handle.
GBPUSD has dropped fairly strongly since the release with the pair falling back near its lowest levels in over a week to trade near the prior swing level of 1.2865. Source: xStation
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