British pound holds steady despite UK manufacturing PMI slip

British pound holds steady despite UK manufacturing PMI slip

The British pound was little changed in the wake of the weaker than expected UK manufacturing purchasing managers index, Tuesday. The closely watched index showed the pace of growth was slower than had been anticipated in December.

By 1220 BST, the British pound was trading at $1.3562, retaining gains made overnight on bearish US dollar sentiment and a little higher than the $1.3544 it was at around the UK market open.

Growth slows across the board

Data experts IHS Markit’s manufacturing PMI index slowed to 56.3 in December from, 58.2 in November. However, despite the broad-based slowdown, the index remains in strongly positive territory, as a balance above 50 denotes expansion.

A figure below 50 shows the sector is contracting.

The slowdown in the pace of growth was noted across output, new orders and employment, the survey showed. However, as with the headline measure, all of them remained above the key 50 level.

“UK manufacturing ended 2017 on a positive footing,” said Rob Dobson, a director at IHS Markit. “Although growth of output and new orders moderated during December, rates of expansion remained comfortably above long-term trend rates.”

“The sector has therefore broadly maintained its solid boost to broader economic expansion in the fourth quarter. The outlook is also reasonably bright, with over 50% of companies expecting production to be higher one year from now,” Dobson added.

Euro Zone Manufacturing PMI ends 2017 on record high

The final euro zone manufacturing PMI for December was also published earlier Tuesday, where the record high of 60.6 recorded in the preliminary reading, was confirmed.

The strong rise was driven by record gains in Austria, German and Ireland.

“The eurozone manufacturing boom gained further momentum in December, rounding off the best year on record and setting the scene for a strong start to 2018,” said IHS Markit’s chief business economist Chris Williamson. 

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.

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