UK manufacturing survey falls to 2-year low

The latest data on the UK manufacturing sector has come as something of a disappointment with the PMI reading for August coming in at 52.8 compared to a consensus forecast of 54.0. The prior reading was also revised lower for good measure to now stand at  53.8 from 54.0 previously. This reading is the lowest in two years and has put more pressure on the pound this morning with the currency already beginning the new week lower after the latest Brexit developments over the weekend. According to the report job creation has also slowed to “near-stagnation” in what could be described overall as a fairly downbeat assessment from IHS on the current manufacturing environment.

Comments from Barnier that he "strongly opposed" UK PM May's proposals on future trade while advising European carmakers that they will have to use fewer British-made parts after Brexit had seen the pound fall lower and this latest data miss has pushed the GBPUSD rate back below the $1.29 handle. The market has now erased nearly all the gains since Barnier made his upbeat Brexit remarks last week and the near-term outlook for sterling remains clouded with traders likely now focusing on the service sector PMI due out on Wednesday while remaining mindful of any Brexit-related remarks.