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03.10.2016 12:20

European session review: the British pound dropped significantly against the US dollar

The following data was published:

(Time / country / index / period / previous value / forecast)

6:00 Germany official holiday

7:15 Switzerland Retail Sales m / m in August 0.2%

07:15 Switzerland Retail sales, y / y in August -2.2%

Switzerland 7:30 PMI in the manufacturing sector in September 51 53.2

France 7:50 PMI in the manufacturing sector (the final data) September 48.3 49.5 49.7

Germany 7:55 PMI in the manufacturing sector (the final data) September 53.6 54.3 54.3

08:00 Eurozone PMI in the manufacturing sector (the final data) September 51.7 52.6 52.6

8:30 UK PMI Manufacturing Index September 53.3 52.1 55.4

The pound depreciated significantly against the US dollar, approaching July 6 low on comments by British Prime Minister on the Brexit process. However, a further currency collapse halted by extremely strong data on business activity in the manufacturing sector of the United Kingdom. Recall, in the weekend Theresa May said that the authorities intend to triger Article 50 of the Lisbon Treaty, providing for the country's right to withdraw from the EU until the end of March 2017. She stressed that Brexit is an "extremely difficult" process and the British authorities have to carry out lengthy negotiations with Brussels regarding the details of the country's exit from the union. The authorities plan to continue an active trade policy with the EU Member States.

Also today, financial minister Hammond warned that the UK economy will face turbulence, when the government will negotiate the exit from the EU. Hammond said he would like to see a deal with the EU, which included the full access of British companies to the EU's single market, while at the same time, the government listens to the call of the voters who need to regain control over the country's borders.

Markit Economics and CIBS showed that UK's manufacturing sector expanded in September at the fastest pace since mid-2014, helped by faster growth in output and new orders. As it became known, the index of manufacturing activity improved in September to 55.4 points compared to 53.4 points in August. The last reading was the highest since June 2014. Economists had expected the index to decline moderately to 52.1 points. "The rebound in the last two months has been encouragingly strong, and puts the sector on course, which will provide an additional positive contribution to GDP in the 3rd quarter," - said Rob Dobson, senior economist at Markit.

The euro traded in a range against the US dollar, while remaining near the opening level. However, little support has provided statistics for the euro area. The final data published byMarkit Economics showed that business activity in the euro zone's manufacturing sector accelerated last month, confirming preliminary estimates. The PMI for the manufacturing sector rose to 52.6 points compared with 51.7 points in the previous month. In addition, the report stated that the growth of production, new orders, new export orders and employment accelerated in September compared to August. "Today's PMI data indicate that the production, which grew at a steady pace in the second quarter (by about 2 per cent per annum), gained further momentum in September," - said Chris Williamson, chief economist at the business IHS Markit.

Among Member States, Germany and Austria recorded the fastest growth in September. Italy has returned to expansion, while France came close to stabilizing. German Manufacturing PMI rose to a three-month high, and amounted to 54.3 points compared to 53.6 points in August. The final readings correspond to the preliminary assessment. It is worth emphasizing the expansion of activity in the sector observed during the last 22 months. Meanwhile, the French manufacturing PMI improved to 49.7 from 48.3 in August. This is the highest score in the last seven months, and only slightly below the neutral mark of 50.0. The value was also higher than the preliminary assessment of 49.5.

EUR / USD: during the European session, the pair traded in a narrow range

GBP / USD: during the European session, the pair fell to $ 1.2844

USD / JPY: during the European session, the pair traded in a narrow range

03.10.2016 11:50


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