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Post the dismal PMI data released earlier , it suggests it not just a long bank holiday to celebrate the Queen's Jubilee is getting in the way of UK growth, weak orders from the US, Asia and Europe are also weighing heavily on the UK's growth prospects.
UK PMI manufacturing falls sharply to 45.9 from 50.5 in April. The lowest level since May 2009. Very weak sub-indices too, new orders fell to 42.00, which was the low since the bottom of the recession in 2009. This does not bode well for the UK growth in Q2. This is very deflationary, supports more QE and is sterling negative
Cable falls below 1.53 to 1,.5290 - the lowest level in over a year.
Although cable looks very oversold, fundamental and economic factors seem to be dominating at the moment. Below 1.5290, there isn't much short term support until 1.5200. The pound seems to be following the euro. Back in 2010, while the euro fell to below 1.20, cable fell to below 1.45, so there could be more downside to come...
GBPUSD weekly chart... although shorter term indicators suggest this pair is oversold, the long-term chart suggests there could be more weakness to come and we remain a way off from the sub 1.45 low we reached in 2010.
Kathleen Brooks| Research Director UK EMEA | FOREX.com
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