UK Manufacturing PMI Unexpectedly Drops to 45.4, British Pound Decreases - 1.8.2012

UK Manufacturing Purchasing Manager Index dropped to 45.4 in July, down from a revised 48.4 in June according to the Chartered Institute of Purchasing and Supply (CIPS). Economists were expecting the UK PMI to remain the same, however it fell unexpectedly indicating that the Manufacturing sector in Great Britain has significantly shrank in July. Readings below 50 show contraction in activity and therefore UK manufacturing contracted at a higher rate in July getting deeper into recession territory. Moreover, the June Manufacturing PMI was revised from 48.6 down to 48.4. The British pound sank on weaker manufacturing data versus the greenback, earlier today rose to 1.5687 resistance but after the news plunged to 1.5624 level. At the same time the Euro did not miss the opportunity to gain ground against the Sterling rising up to 0.7873, taking advantage of the weaker PMI data.