The UK round off good manufacturing PMI's in the EU session

To round of the good European session manufacturing PMI numbers, UK preliminary manufacturing PMI for February printed at 54.9 vs the median analyst consensus of 53.1 (prev 54.1). So a good beat on expectations and also above last months number.

Ahead of the data release GBP/USD printed above 1.40 for the first time in April 2018. There was a small spike higher after the release of the number but then the gains were almost immediately pared.

Looking slightly closer into the report, Manufacturing companies often cited severe supply chain disruptions as a factor holding back production volumes. This was attributed to international shipping delays, strong worldwide demand for raw materials and Brexit-related trade frictions.

Chris Williamson, Chief Business Economist at IHS Markit, said the manufacturing sector’s performance worsened amid escalating Brexit-related export losses and

supply chain disruptions. More than half of all companies reporting lower exports attributed to the decline to Brexit-related factors. Brexit was also the most commonly cited cause of supply delays.".

He added "More encouragingly, although the data hint at a renewed contraction of the economy in the first quarter, business expectations for the year ahead improved to the highest for almost seven years, suggesting the economy is poised for recovery. Confidence continued to be lifted by hopes that the vaccine roll-out will allow virus-related restrictions to ease, outweighing concerns among many other firms of the potential further damaging impact of Brexit-related trading issues.”.

German manufacturing numbers for February bounced very nicely to reach 60.6 vs the analyst consensus of 56.5 (prev 57.1). The rebound from China could have had a massive impact on the data. The EUR is now trading at daily highs with EUR/USD moving toward the 1.22 area trading 0.31% in the black.

The EU manufacturing PMI (Feb) also beat consensus estimates to reach 57.7 vs the expected reading of 54.3.

German services PMI for February however was slightly disappointing as the nation remains in lockdown the number came in at 45.9 vs exp 46.5 (prev 46.7). This leads the prelim composite PMI for February to be 51.3 (exp 50.5; prev 50.8)

France also recorded their preliminary PMI's this morning with manufacturing at 55.0 (exp 51.5; prev 51.6), services PMI 43.6 (exp 47.0; prev 47.3) and composite 45.2 (exp 47.5; prev 47.7). Over to the US this afternoon.

(Below is the intraday chart of GBP/USD which highlights the price action for the day)

By Rajan Dhall

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