Pound tanks on weak manufacturing figures

Published: 10 Jul at 10 AM Tags: Euro, Dollar,

The euro has hit a three-month low against the US dollar after an official from the European Central Bank suggested that record-low interest rates are likely to remain in place for another year. The single currency is also suffering because Italy’s credit rating has been downgraded by Standard & Poors.

The euro slumped to $1.277, a drop of 0.73 per cent against the greenback. The dollar continues to be popular with investors as it looks likely that the Federal Reserve will begin pulling back on its policy of easy cash before the close of 2013. Better than expected jobs data have helped the dollar retain its strength against a basket of other currencies.

The pound, however, has tanked following the release of data that shows manufacturing in the UK contracted by 0.8 per cent in May. Analysts had expected 0.3 per cent growth. Sterling is currently down 0.61 per cent at $1.4861.

The Australian dollar is doing slightly better and has hit a one-month high against both the euro and the pound. The Aussie is presently trading at $0.9166.

China is due to release manufacturing data. Weaker than expected figures will give a leg-up to the yen.