GBP investors were encouraged as MPs submitted their request for an emergency debate to rule out a no-deal, even as Prime Minister Boris Johnson threatened to call a snap general election. Meanwhile, this afternoon’s US ISM manufacturing PMI – a preferred measure for manufacturing output – slipped into its first contraction since January 2016. Added to this, Markit’s US manufacturing PMI edged closer to stagnation, reaching its lowest level since September 2009.
Commenting on the data, Chief Business Economist at IHS Markit, Chris Williamson said: “The August PMI indicates that US manufacturers are enduring a torrid summer, with the main survey gauge down to its lowest since the depths of the financial crisis in 2009. Output and order book indices are both among the lowest seen for a decade, indicating that manufacturing is likely to have again acted as a significant drag on the economy in the third quarter, dampening GDP growth.”
Earlier this morning, data revealed that the UK construction sector had suffered its sharpest decline in new work since March 2009, edging down to 45 in August from 45.3 in July thanks to a weakening economy and the plague of Brexit uncertainty.
As a result, the pound sank to a three-year low against the US dollar.
Business optimism also declined to its lowest level in over a decade, close to levels seen during the previous UK recession.
Meanwhile, further Brexit pessimism is likely to push Sterling lower and could see the pairing close at its lowest level since April 1985.
Looking ahead to Wednesday, it is likely Sterling will continue to slump against the dollar if the closely watched UK services PMI inches closer to stagnation.