News Column

Dollar Falls Further Versus Resurgent Sterling

July 1, 2014



WASHINGTON (Alliance News) - The dollar continued its dramatic downtrend against the sterling on Tuesday, dropping to its lowest since 2008 after upbeat UK manufacturing data.

Traders also expressed appetite for higher-yielding currencies after a strong report on Chinese factory activity signaled the pace of the global recovery is picking up.

The dollar slipped near USD1.72 versus the sterling, its worst since the financial crisis more than five years ago.

Data showing robust activity in British manufacturing increased speculation the Bank of England will raise interest rates this year.

At the same time, the Federal Reserve is widely seen waiting until mid-2015 as the US recovers from a brutal economic contraction in the first quarter of this year.

The dollar was flat near USD1.37 versus the euro, having dropped about 2 cents since hitting a 4-month peak on June 6.

There was little movement against the yen as the dollar stabilized following three straight days of modest losses. The pair held at Y101.55 for most of the session.

In economic news, eurozone manufacturing recovery slowed slightly more than initially estimated in June, final data from Markit Economics showed. Nonetheless, the score remained above 50, extending the recovery to a twelfth successive month in June.

The final Purchasing Managers' Index for manufacturing dipped to a seven-month low of 51.8 in June from 52.2 in May and below the earlier flash estimate of 51.9.

Estimates released by the German Federal Labor Agency showed that German jobless rate was unchanged at 6.7% in June, in line with expectations. The number of unemployed people rose by 9,000.

Meanwhile, the German Federal Statistics reported that jobless rate in the nation was unchanged at 5.1% in May.

A separate survey showed that manufacturing activity in the UK gained further ground in June, with the Markit/CIPS manufacturing purchasing managers' index rising 0.5 points to 57.5.

Chinese manufacturing purchasing managers' index rose to a six-month high in June after a weak start to the year. The results of a survey by the China Federation Of Logistics And Purchasing and the National Bureau of Statistics showed that the manufacturing PMI rose to 51 in June, in-line with economists' expectations, from 50.8 in May.



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Source: Alliance News


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