U.K. Manufacturing Slips to Record Low, Pound-Dollar Pulls Back From Intraday High
Manufacturing activity in the U.K. contracted for the fifth consecutive month, falling to a fresh record low of 41.0 from a revised reading of 45.3 in August. The data suggests that the economy may slip into a recession in the third quarter as the housing and financial crisis continue to take a toll on Europe’s second largest economy. Meanwhile, the index of services was unchanged after rising 0.2% in June, signaling that economic activity may remain subdued for the rest of the year as the BoE continues to hold a neutral policy stance. However, as the downturn in the economy accelerates, the central bank could be forced to lower the benchmark interest rate as growth prospects turn increasingly dim. Meanwhile, the pound-dollar (GBPUSD) pulled back after reaching an intraday high of 1.7871, and continues to hold near 1.7790.
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