UK Manufacturing prices slow and reduce inflation pressures

Home » Foreign Currency News » UK Manufacturing prices slow and reduce inflation pressures

Friday's UK data supported the Bank of England's decision to leave interest rates on hold at the record low of 0.5%. Input prices - manufacturers' costs for purchasing raw materials - fell by 2.0% in May with the annual rate of increase dropping from 17.9% to 15.7%. Output prices - the price manufacturers' sell finished goods at - increase by just 0.2% in the same period, lowering the annual rise from 5.5% to 5.3%. The April manufacturing production figures rose by 1.3% on the month, although the broader industrial production (which includes manufacturing and the energy and water sectors of the economy) was down by -1.2%.

Unusually, Sterling reacted positively to the news. The main reason for the strange behaviour was the selling of Sterling immediately before the figures which seemed to leave Sterling with only one way to go as it was at the the low of the day when the figures came out.

There was also a strange reaction to some positive Canadian employment numbers which beat expectations as unemployment fell by 0.2% from 7.6% to 7.4% and 22,300 jobs were created in May. The Canadian Dollar fell against the US Dollar and only just managed to hold steady against Sterling; perhaps it was a fall of $3 in the price of oil.

Compared to Friday morning, Sterling is unchanged against the yen and the Swiss franc and is more or less the same against the Australian and Canadian dollars. It probably would have been unchanged against the New Zealand dollar too had it not been for another earthquake in the Christchurch area.

It is a quiet start to the week with Germany, Switzerland and Australia enjoying bank holidays and very little in the way of data. The Royal Institute of Chartered Surveyors publishes it's house price balance at midnight in the only UK contribution.

Given the way exchange rates dawdled into the weekend and as today's exchange rates have opened very near to Friday's closing exchange rates, it could be another pretty dull day.