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U.K. Manufacturing PMI Continues To Decline In November

Published 12/31/2000, 07:00 PM
Updated 12/01/2008, 04:48 AM

Release Explanation: As an indicator of economic performance the PMI has the ability to easily affect currency valuations as Institutions re-align existing positions, or build new, on the strength of these reports. It measures the activity level of Purchasing Managers, who are surveyed on production, employment, inventories, orders, delivery data. The PMI is split into reads on Manufacturing, Service, and Construction industries. A read over 50 denotes growth.

Trade Desk Thoughts: The UK Manufacturing PMI contracted for a seventh consecutive month in November, indicating a strong recessionary period the U.K. economy is facing. According to the PMI report, the 34.4 read shows the manufacturing sector is in the biggest contraction phase seen in the last decade. The manufacturing sector is affected by the ongoing declines in the housing market coupled with very weak demand, and this is reflected in the PMI release. Later this week, the Bank of England is expected to cut interest rates again, down to 2%.

Forex Technical Reaction: The pound moved 30 pips as soon as the release hit the wires. In the overnight session, the pound continued to move lower, falling 270 pips.

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