The GBP/USD reached a high of 1.5327 and a low of 1.4810 in the New York session yesterday. Sterling was also hit against the Euro falling by 2.5%, with trading as low as 1.1723 (0.8530 inverse).
These dramatic moves were linked to poor UK PMI figures released which showed manafacturing industry record its worst ever one month perforamnce since the series began in 1992. Total new orders collapsed as credit restrictions affected client confidence and export orders continued to tumble in the face of waning foriegn demand. The BoE also announced yesterday that mortgage approvals have slumped 72% from their 2007 peak as the latest figures showed another dip during October.
In the States, stocks had their best week in 75 years last week with S&P gaining 12.5% but these gains were almost wiped out yesterday as it fell 9% due to the annoucement that the US has been in recession since December 2007. Surveys carried out in China, US and the Eurozone showed that economic activity is contracting faster than expected, infact the US ISM survey showed that prices paid by manafacturers had there sharpest drop since 1948 raising deflation worries.
Pressure came to bear on the Euro as Stocks crashed lower on recession fears. Euro zone manufacturing fell to 35.6 in November, on EUR/USD, the 1.26 mark provided support during the day with losses limited. The main concern was the slump in October German Retail Sales, which came in at -1.6% vs. +0.5% expected. Overall the EUR/USD traded with a low of 1.2583 and a high of 1.2704 before closing the day at 1.2600.
Oil prices fell below $50 for only the second time this year after OPEC delayed a further production cut until mid-December. The oil cartel, which controls 40% of the world’s production, said demand was weakening fast with the global economic crisis but agreed to wait until a meeting in Oran Algeria on December 17th to further reduce its output.