It was an up and down day for Lady Cable, which couldn’t sustain its winning run yesterday. GBP/USD basically stayed within range, and eventually ended the day at 1.5685, just 7 pips lower than its opening price.
One of the reasons why the pound may have been unable to post new highs is probably because of the manufacturing PMI, which indicated that manufacturing activity is slowing down. While the report printed better-than-expected at 47.6, it was also the index’s lowest reading in over two years. This highlight the weakness in the British economy, as the U.K. is suffering from poor demand from the U.S. and the euro zone.
In other news, BOE head honcho Mervyn King delivered a speech regarding the state of the British banks. While King did say that U.K. banks are better off than their European counterparts, he did say that not everything is fine and dandy. For one, U.K. banks’ exposure to Irish, Italian, and Spanish debt amounts to nearly 160 billion GBP, and there’s no telling when this will finally come to haunt them.
For today, the only red flag we have coming up is the construction PMI, which is scheduled to be released at 9:30 am GMT. Word is that the index will print at 52.1, which would be slightly lower than the previous month’s reading of 53.9. If this comes in worse than expected, it could cause the pound to take a small hit, so make sure you pay attention when this report is released.