Manufacturing set to subtract from UK GDP

The UK manufacturing PMI fell to 51.1 in October, down from a revised 53.6 in September.
New orders and employment sub-indices of the PMI both declined for the first time in 27 months.
The current slowdown in the economic activity in manufacturing indicates the fourth quarter subtraction of manufacturing from GDP growth.

Mario Blascak, PhD Independent Analyst

The newswires are full of Brexit headlines of late and the way the news surface the public is chaotic and has a significant market influence on Sterling. Even greater influence than the economic fundamentals.

The news of the UK manufacturing PMI falling to 51.1 in October, down from a revised 53.6 reading in the previous months also had a little market effect amid news of the UK signing up the financial services deal with the European Union early on Thursday.

The macroeconomic consequences of such a sharp deceleration in the manufacturing activity in the UK are negative. While headline manufacturing PMI dropped 2.5 points and approached 50.0 line dividing economic contraction from the economic expansion territory, the sub-indices of new orders and employment also fell and the fall marked a 27-month low in October. The UK manufacturing PMI falls prey of Brexit uncertainties and Trump’s led trade wars.

The decline in the economic activity in manufacturing is now set to contribute negatively to the overall performance of the UK economy, subtracting some 0.2% off the fourth quarter GDP.

“At current levels, the survey indicates that factory output could contract in the fourth quarter, dropping by 0.2%. New orders and employment both fell for the first time since the Brexit vote as domestic and overseas demand was hit by a combination of Brexit uncertainties, rising global trade tensions and especially weak demand for autos,” Rob Dobson, the director at IHS/Markit compiling the PMI survey wrote in the report.

The outlook for the UK manufactures remains positive with some 48% of surveyed manages are forecasting expansion leaving the second half of this year taking the toll of rising Brexit uncertainties and escalating global trade tensions.

UK manufacturing PMI

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.