Disappointing manufacturing data from the UK prevented sterling from taking advantage of similar weakness displayed in the economies of its major trading partners. Sterling had advanced during early trading in anticipation of positive UK manufacturing business activity data. With the euro still reeling from yesterday’s poor inflation data, and further worrisome rhetoric from members of the European Central Bank, sterling had climbed close to the two-year highs seen last week. Sterling slipped, however, as manufacturing activity fell to its lowest level in 11 months, weakening the currency to a one-month low against the US dollar. A similarly disappointing manufacturing growth result from the US later in the day saw sterling recover lost ground throughout the afternoon to finish relatively flat.
Today sees the release of the construction Purchasing Managers’ Index (PMI). With the construction industry booming over the past 10 months, investors will be looking for a positive reading to restore confidence in sterling. We also have the European Central Bank meeting today which could cause some fireworks in the currency markets if they try and boost the Eurozone economy