Sterling loosened its stranglehold over the euro on Monday as British manufacturing output fell in November. S&P Global’s manufacturing PMI survey was revised lower to 48 in November, its weakest level since February.
Over in the USA, Donald Trump was busy threatening members of the BRICs community (an economic shorthand for Brazil, Russia, India, China and others) with further tariffs. The political intrigue was mirrored in Europe, as the French parliament sputtered ever closer towards a vote of no confidence.
France’s constitutional complexities make explaining the unfolding drama slightly tricky. By way of summary, the euro came under pressure yesterday due to the government’s upcoming budget. The money-saving measures within that budget have proved unpopular with many and it took Michel Barnier forcing it through to break the impasse. However, that decision seems likely to prompt a vote of no-confidence in the government this week.
European factory floors struggled alongside their British counterparts. Final HCOB manufacturing PMI numbers for November were downwardly revised in France and Germany but came in unchanged at the initial 45.2 for the entirety of the eurozone. The Hamburg Commercial Bank’s chief economist said “there’s no sign of a recovery anytime soon” for European manufacturers.
Despite this, the euro still climbed over the pound on Monday. GBP/EUR’s fall of half a cent to begin the week still leaves it more than 1% up since the start of November. The euro and the pound both struggled against the US dollar, which climbed as markets reacted to Trump’s comments and new economic data.
The US Institute for Supply Management (ISM) manufacturing PMI landed at 48.4 last month – well above forecasts and October’s 46.5. New orders rebounded after a seven-month stretch of contraction while price pressures eased. The headline data is looking up but demand within the sector remains weak, according to the ISM’s commentary.
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