Sterling weakened against the dollar and euro immediately after the release of UK manufacturing data which showed the manufacturing sector slowed at the fastest pace since March 2009. According to a report by Markit Economics, the May PMI dropped to 45.9 from April’s revised 50.2, below expectations for a reading of 49.7. A number below 50 shows a slowdown in manufacturing.
The main driver behind the slowdown in UK manufacturing was low employment and scaling back in production by many British companies, as the country entered a recession resulting from worsening economic conditions and a subdued domestic market.
This week the British Chambers of Commerce lowered its projected growth for the UK economy from 0.6 percent to 0.1 percent for 2012, and projects 1.9 percent growth in 2013. Recently the IMF called for increased stimulus to try and fight the effects of the euro-zone debt crisis.
GBPUSD dropped to new 4-month low of 1.5274 after the data.