Sterling suffered a series of sharp losses against its most-traded currency peers at the end of last week’s session as investors reacted acerbically to data showing that British manufacturing activity dulled in April.

Markit Economics’ PMI report detailed that factory output slowed significantly from a negatively revised 54.0 to 51.9 last month. Traders had expected a much higher score of 54.6 and subsequently took to selling the Pound in response to the underwhelming score. The headline index was driven lower by the sharpest dip in new orders for over two years, the steepest decline in output prices for almost six years and a lacklustre rise in employment prospects.

Combined with last week’s underwhelming first quarter growth score of 0.3%, the soft PMI result left markets with little immediate desire to invest in British assets.

Euro

The Pound to Euro exchange rate plummeted by over -200 pips on Friday to reach a two-month low as markets reacted strongly to the significantly weaker-than-expected British manufacturing PMI report. The single currency was also buoyed by consumer price index data earlier in the week, which showed that the currency bloc emerged from disinflation during April – albeit with a stagnant inflation print of 0.0%.

With the European Central Bank’s ambitious bond-buying scheme appearing to be having a positive impact on price pressures in the Eurozone and economic data in the periphery – bar Greece – beginning to improve, some speculative investors have cast half an eye into the future and like what they see: improved liquidity, reduced borrowing costs, steady improvements in the jobs market and a rebalancing of the richer and poorer member states.

However, most investors remain focussed on the situation in Greece, which threatens to disrupt the recent rebound in European economic sentiment. So, even though things are looking up on the continent, the single currency remains at risk from ‘Grexit’ related plunges in demand.

US Dollar

‘Cable’, the city slicker nickname for GBP/USD, sunk by over two whole cents on Friday due to a nasty UK manufacturing print, which undermined confidence in the Pound.

Sterling had been trading at a seven-week high against the US Dollar earlier in the week due to a dismal American GDP score of just 0.2%, year-on-year, but reassurances from the Federal Reserve that the domestic economy is still on track for a lift-off in interest rates allowed the ‘Greenback’ to claw back some of its losses. The downbeat British PMI score provided traders with the perfect excuse to sell Sterling and take advantage of the elevated GBP/USD rates.

The divergence in interest rate hike expectations continues to favour the US Dollar and this looks likely to remain the case if upcoming British data comes in as softly as it did last week.

Canadian Dollar

The market-wide sell-off in Sterling stretched to GBP/CAD on Friday, as April’s disappointing manufacturing numbers ensured that the Pound would give back gains made earlier in the week.
Sterling shed around -175 pips against the ‘Loonie’ on Friday, even though Canadian manufacturing printed below the key 50.0 mark that separates growth from contraction and crude oil prices dipped once more on concerns of an oversupply in North America.

Australian Dollar

Seldom one to duck a trend, the risk-sensitive Australian Dollar also jumped on the UK manufacturing PMI bandwagon at the end of last week’s session and registered a near-two-cent appreciation against the Pound.
Sterling had been trading close to monthly highs versus the Antipodean currency but the drastic downgrade to factory output prospects provided by Friday’s PMI result sent GBP/AUD sliding lower.

New Zealand Dollar

The Pound lost out on almost exactly -200 pips to the New Zealand Dollar on Friday as GBP/NZD tumbled from a near-two-month high on concerns that economic output in Britain could be on track to cool in 2015 due to the domestic currency’s relative strength against most of the majors. Apart from against the US Dollar, Sterling has performed strongly so far this year and recent data suggests that this strength could have deterred potential foreign buyers from investing in British exports.