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UK manufacturing PMI misses expectations while import costs rise

GBPUSD News by Newsroom on 06:15 November 01, 2016 EST
The Markit/CIPS UK manufacturing purchasing managers index fell to 54.3 from 55.5 in September, marginally missing expectations of 54.4. Still, it remained well above its long term average of 51.5 and the 50 threshold signalling continuing expansion.

New order volumes increased for the third consecutive month and at a pace close to September's recent high.

The effect of the depreciating pound was very relevant in the latest survey, with manufacturers saying this helped efforts to increase inflows of new export business, resulting in new orders from the USA, the EU and China. However that comes as a cost at higher import prices and in dollar-denominated products and commodities such as oil. As a result, purchase price inflation subsequently rose its highest level in almost six years as 90 percent of companies offering a reason for increased costs made some reference to the sterling exchange rate.

GBP/USD traded around 1.2250 ahead of the publication, quite strong following the announcement that BOE Governor Mark Carney will continue until 2019.