U.K. Manufacturing PMI Actual 35.8, Expected 34.4, Previous 34.9

Release Explanation: As an indicator of economic performance the PMI has the ability to easily affect currency valuations as Institutions re-align existing positions, or build new, on the strength of these reports. It measures the activity level of Purchasing Managers, who are surveyed on production, employment, inventories, orders, delivery data. The PMI is split into reads on Manufacturing, Service, and Construction industries. A read over 50 denotes growth.

Trade Desk Thoughts: Although The U.K. Manufacturing PMI came in better than expected in January, it is still the third weakest reading in 17 years as firms shed workers at a record pace. Weaker global demand outweighed any benefit from sterling's fall against major currencies, and domestic conditions were especially poor due to the crisis affecting car making, construction and retail. The employment element of the index hit a fresh record low, falling to 33.5 from 33.9 as firms cut capacity and costs to match thinner order books.

Forex Technical Reaction: The pound dropped 50 pips as soon as the release hit the wires. In the overnight session, the pound continued to move lower, falling 300 pips.