Monday, 3 Aug 2009

GBP Spikes as UK Manufacturing Grows for First Time since June 2008

After the sharp drop in the USD last Friday, many investors were anticipating a rebound for the greenback, but none has been forthcoming so far in today's trading. Various reports from Europe and Britain have pushed risk appetite higher in those countries, pushing many investors into the higher yielding currencies such as the EUR, CHF, and GBP. Meanwhile, the Dollar has been steadily declining across the board.

The British manufacturing sector surprised this morning with a Purchasing Manager's Index (PMI) report that signaled industry growth for the first time since June 2008. The results were higher than forecast and gave most investors a reason to feel optimistic about investing in the UK. As such, the GBP gained ground heavily against all of its currency rivals, climbing as high as 1.6820 vs. the USD.

With a similar report due to be released from the US at 14:00 GMT, there is a chance that the greenback will pare some of these losses as investors price in the growth rate of the American manufacturing sector, relative to Europe's. On the other hand, if this report comes out worse than anticipated, we could see the EUR and GBP climbing to new highs as the day comes to a close. Either way, being online and ready to trade at 14:00 GMT today might be a very wise move for the serious trader.