Pound, the major currency of United Kingdom, experienced its biggest fall in the last 3 weeks against USD as a recent industry report shows that the manufacturing output in UK shrank more than the forecast of the economists. This added to the concerns that this European country is heading towards another recession. On the other hand, UK Government bonds were more or less unchanged on today.
Not only against USD, but Pound has declined against all of its major counterparts as speculations were rife that the slowdown signs will convince the Bank of England that they should increase the stimulus at the policy meeting to be held in this week. Incidentally, during the last 2 meetings, 3 members of the Monetary Policy Committee voted for increasing the asset purchase target from its current value of 375 billion Pounds.
According to the Currency Strategist of Commerzbank AG, Peter Kinsella, the manufacturing data is definitely poor, but, so were the expectations. Peter added that Pound has rallied a little off late. This is the 3rd time when Pound has struggled to break above the $1.5250 in a meaningful way. Peter commented further that selling rallies in Pound-USD seems to be a good idea.
Pound is currently priced at $1.5115, as it experienced a decline of 0.8% on today, marking its biggest since 8th March. Against Euro, Pound dropped 0.7% and is currently priced at 84.92 Pence per Euro. Only yesterday, it appreciated to 84.11 Pence, marking the strongest level since 24th January.
A gauge which measures the UK manufacturing industry results is up to 48.3 in March, from a value of 47.9 in February. The data was released by Markit Economics and the Chartered Institute of Purchasing and Supply. Many were predicting a reading of 48.7; however, the actual result was a bit lower than that. Incidentally, any reading below 50 denotes that the industry is contracting.
A total of 51,653 loans were approved by the UK lenders in February, the least since last September. The loan approval count for January was at 54,187. So far, in 2013, Pound has declined by 5.1%. Among other major currencies, USD went ahead by 2.8%, whereas, Euro tumbled by 0.2%.
The Fixed Income Strategist of Royal Bank of Scotland Group Plc., Simon Peck stated that investors are currently less optimistic about the UK market.