Pound US Dollar (GBP/USD) Exchange Rate Slumps as UK Manufacturing Sector ‘Left Gasping for Breath’
The Pound Sterling US Dollar (GBP/USD) exchange rate slumped and the pairing is currently trading at an inter-bank rate of $1.2648.
The UK manufacturing PMI slumped for the third consecutive month to 48 in June, the lowest level since February 2013.
Added to this, manufacturing production fell at the fastest pace since October 2012, and optimism slipped to the third lowest in the series history.
Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply said:
‘The manufacturing downturn is deepening, with a second month in contraction and production shrinking at the steepest rate for seven years. The triple whammy of the Brexit-delay fallout, weaker domestic and export demand impacted on new orders, optimism and job creation, and the sector was left gasping for breath.’
US Dollar (USD) Rises as US-China Trade Talks Set to Resume
On Saturday, Washington and Beijing agreed to resume trade discussions after US President Donald Trump offered concessions.
President Trump offered to ease restrictions on Chinese telecoms giant, Huawei as well as introduce no new tariffs on Chinese goods.
The US had previously threatened to slap a further $300 billion worth of tariffs on Chinese goods.
Following the successful meeting, speaking to reporters Donald Trump said:
‘We discussed a lot of things, and we’re right back on track.
‘We had a very, very good meeting with China. I would say probably even better than expected, and the negotiation are continuing.’
Investors Optimistic Following Highly Anticipated Trump-Xi Meeting
Fiona Cincotta, Senior Market Analyst at City Index suggested that investors are optimistic following the G20 summit, and said:
‘The much anticipated Trump-Xi Jinping meeting in Osaka delivered as expected, not a full on resolution of the trade dispute between China and the US but some form of truce that includes picking up the broken off trade negotiations between the two countries.
‘For the time being the existing import tariffs will remain in place but the markets will live off the hope that the resumption of the discussions between US and Chinese trade representatives will help lift those sooner rather than later.’
Pound US Dollar Outlook: Will Disappointing US Manufacturing Data Weigh on USD?
Looking ahead to this afternoon, the US Dollar (USD) could slide against Sterling (GBP) following the release of the US ISM manufacturing PMI.
If June’s PMI slides further than expected, it could dampen sentiment in the Dollar.
Meanwhile, on Tuesday the Pound could rise following the release of the UK construction PMI.
The Pound US Dollar (GBP/USD) exchange rate could rise if June’s PMI rises higher than forecast and above the 50 mark.