Pound Down to Three and Half Month Lows on Weak PMI Data

The British Pound Sterling stretched losing streak on Tuesday, May 1, to fall below the $1.37 line for the first time in 3-1/2 months after survey data showed British manufacturing growth sliding to a 17-month low.

The GBP=D3 fell 0.6 percent to $1.3683. It is down nearly 5 percent from a post-Brexit referendum high of $1.4377 hit on April 17.

It was the latest in a run of mediocre economic data and further reduced the chances of a rate increase from the Bank of England when it meets next week.

“We are starting to see any residual expectations of a rate hike from the Bank of England next week starting to fade,” said Viraj Patel, an FX strategist at ING in London.

Swap markets now indicate a less than 20 percent chance of a rate increase next month, down from 90 percent in early April.

Britain’s FTSE 100 .FTSE hit a session high after the data sent the pound sharply down. The leading index of international companies, which benefit from a weaker sterling, was last up 0.28 percent.

British gilt futures FLGcv1 rose modestly by around 7 ticks to turn positive and were last up around 3 ticks on the day.

Data from the U.S. Commodity Futures Trading Commission showed net long speculative positions, which had started April at their highest level in four years, posting their second-biggest weekly drop of the last eight months.

Against the euro, sterling weakened 0.26 percent to 87.94 pence.


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