We saw UK manufacturing PMIs hold up better than some European releases, coming in at 54.2 against expectations of 52.5. However a lot of the outperformance was explained by companies stockpiling ahead of Brexit, so there was little benefit to the pound. Despite better news from John Lewis about December sales, as the day wore on the dollar gained strength, with GBPUSD stabilising initially at 1.2580 before the Flash Crash hit.
Despite the fact it was an American company having a hard time in China, the pound still slipped over 200 points in 30 minutes, before staging a recovery back towards 1.2580 again. The message seems to be that economic data is largely being ignored for the time being and that general risk is spurring excessive moves at the start of the year.
