The GBP/USD declined on Friday, but was still trading near two-month highs following disappointing manufacturing data.
The GBP/USD fell sharply from the 1.5400 region, which had been tested early on in the European session. The GBP/USD tumbled 0.5% or 77 pips to 1.5270 just prior to the opening of the North American markets. The pair is testing the initial support at 1.5273. On the upside, resistance is likely found at 1.5463.
In other trading, the pound plunged against a surging euro, as the EUR/GBP advanced 0.9% to 0.7377. The pair is now looking to test the 0.7429 resistance.
Pound sterling also weakened against the Japanese yen, as the GBP/JPY tumbled 0.3% to 182.73. The pair’s next support level is located at 182.50. On the upside, initial resistance is likely found at 184.08.
The British pound was under pressure after Markit Group said UK manufacturing PMI slowed unexpectedly in April, fueling concerns about Britain’s lop-sided recovery. The Markit manufacturing PMI fell to 51.9 in April from 54.4 the previous month. A median estimate of economists forecast a slight increase to 54.6.
“Coming on the back of weaker-than-expected GDP numbers on Tuesday and only six days before the General Election, today’s UK PMI delivered less than positive news on the health of the manufacturing sector,” said Markit senior economist Rob Dobson in a statement.
He added, “Rates of expansion in production and order books both slowed sharply in April, meaning manufacturing is again unlikely to provide much of a boost to broader economic growth. This keeps the emphasis for maintaining the recovery highly reliant on the service sector.
Separately, Britain’s consumer-led recovery brightened in March, as lending to consumers rose by its highest level since before the financial crisis. Net lending to individuals rose to £1.242 billion in March from £785 million in February, the Bank of England reported on Friday. That was well above the median estimate of £800 million.
Lending to businesses increased by £2.72 billion, the biggest single-month gain since records began in 2011.
Meanwhile, mortgage approvals moderated slightly in March, falling to 61,341 from 61,523, the BOE also said. Analysts forecast mortgage approvals to rise to around 62,400 in March.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.