Pound Declines As U.K. Private Sector Contracts Most Since Early 2009
July 22 2016 - 01:06AM
RTTF2
The pound fell against its major counterparts in early European
trading on Friday, reversing from early highs, after data showed
that U.K. private sector activity contracted at the steepest pace
since early 2009 after the "Brexit vote."
Flash survey results from Markit showed that the flash composite
output index fell to an 87-month low of 47.7 in July from 52.4 in
June.
The services Purchasing Managers' Index dropped
more-than-expected to 47.4, an 88-month low, from 52.3 in the
previous month. The expected level was 48.8.
The manufacturing PMI came in at 49.1, down from 52.1 in June,
but slightly above the expected score of 48.7. This was the lowest
score in 41 months.
Meanwhile, European stocks are weaker, as caution crept in ahead
of next week's Fed and BOJ meetings. While ECB President Mario
Draghi gave no hints about further hints in September, the comments
from BOJ Governor Haruhiko Kuroda poured cold water on the idea of
"helicopter money" to combat inflation.
The pound was higher against most majors in Asian trading.
The pound, having advanced to a weekly high of 0.8300 against
the euro at 4:00 am ET, reversed direction and fell to 0.8378. The
pound is likely to find support around the 0.85 zone.
Flash survey data from Markit showed that Eurozone private
sector expanded at the weakest pace in one-and-a-half-years in
July.
The flash composite output index fell to 52.9 in July, an
18-month low, from 53.1 in June. Nonetheless, the score was above
the expected level of 52.5.
Easing from an early 4-day high of 1.3289 against the dollar,
the pound fell 0.9 percent to 1.3165. The next possible downside
target for the pound-dollar pair may be located around the 1.30
level.
The pound dropped to a 2-day low of 1.2972 against the franc,
following an advance to 1.3099 at 4:00 am ET. The pound is seen
finding support around the 1.28 region.
The pound moved off from an early high of 141.09 against the
Japanese yen, edging down to 139.65. The pound is poised to test
downside target around the 136.00 area.
Survey data from Markit showed that Japan's manufacturing sector
contracted again in July but the pace of deterioration slowed.
The manufacturing Purchasing Managers' Index rose to 49 in July
from 48.1 in June.
Looking ahead, flash U.S. manufacturing PMI for July is due for
release in the New York session.
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