In early European deals on Thursday, the pound tumbled to a fresh multi-month low against the Swiss franc and a 6-day low against the US dollar as U.K. stocks dropped on weak global cues and concerns about sustaining global economic recovery.
The pound also declined against the euro, but it has been largely showing choppy trading against the yen after tumbling to a new multi-week low in early Asian deals.
Possible downgrade of Spain’s AAA rating, dismal U.S. ADP employment data, weaker than expected manufacturing data released in China impacted market sentiment.
Payrolls giant ADP reported yesterday that 13,000 new private-sector jobs were created in June, much less than the 60,000 jobs that economists had expected.
In addition, Moody’s Investors Service said yesterday that it has put Spain’s Aaa local and foreign currency government bond ratings on review for possible downgrade.
The rating agency said its decision was prompted by the deteriorating economic growth prospects, the challenges the government faces in achieving its fiscal targets and concerns over the impact of rising funding costs over the medium term.
Stocks and higher-yielding currencies came under heavy selling pressure today as dismal economic reports released from China and Australia added to doubts about the strength of the global recovery, with traders grossly ignoring better-than-expected Japanese manufacturers’ sentiment data.
China’s manufacturing purchasing managers’ index fell to 52.1 in June from 53.9 the previous month, reinforcing the view that the Chinese economy may be slowing.
U.K.’s benchmark FTSE 100 index is currently trading at 4,848.90 – down 67.89 points or 1.4% over its previous close.
The pound plunged against the US dollar in early European session on Thursday. The pound-dollar pair that closed yesterday’s trading at 1.4943 fell to a 6-day low of 1.4876 at 3:25 pm ET. The next downside target level for the pound is seen at 1.486. The pair is now worth 1.4890.
At 3:30 am ET Thursday, the pound slumped to a new multi-month low of 1.5965 against the Swiss franc. This may be compared to yesterday’s close of 1.6107. If the pound weakens further, it may likely target the 1.581. The pound-franc pair is presently trading at 1.5980.
Switzerland’s SVME purchasing manager’s index dropped in June from a historic-high recorded in May, but continued to signal growth in the country’s industrial sector.
The PMI fell to 65.7 in June from May’s 66.4, a joint report by the SVME Association of Purchasing and Materials Management and Credit Suisse showed. That was in line with economists’ expectations.
During early European deals on Thursday, the pound declined against the euro. As of now, the pound is worth 0.8222 per euro with 0.838 seen as the next downside target level. At yesterday’s close, the euro-pound pair was quoted at 0.8190.
The pound that tumbled to a new multi-week low of 131.47 against the yen in early Thursday Asian deals at 10:35 pm ET recovered thereafter. But the pound fell again after reaching a high of 132.23 at 1:10 am ET. As of now, the pound-yen pair is worth 131.83, down from yesterday’s close of 132.11.
The Bank of Japan’s quarterly Tankan survey indicated today that the large manufacturers’ index hit its highest level in two years in the second quarter of 2010, breaking into positive territory with a score of 1.
The U.S. weekly jobless claims report for the week ended June 26, ISM manufacturing index for June, pending home sales and construction spending reports for May have been slated for release in the North American session today.