Sterling has weakened slightly following the release of the first set of flash PMI data for the UK manufacturing and service sector.
The manufacturing PMI fell to 48.3 in November from 49.6 in October while the arguably more important services PMI fell to a 40-month low of 48.6 from 50.0. The data suggest that UK GDP growth may have contracted in the final quarter of the year, with businesses and consumers delaying major investment and spending decisions ahead of the 12th December general election. GBP/USD is currently down to a one-week low of 1.285.
The Euro has proved somewhat more resilient, despite Eurozone PMI data also disappointing, with EUR/USD trading around 1.0105. The composite PMI slipped further to 50.3 in November from 50.6 in October but remains range-bound.
Ultimately global FX volatility remains remarkably low, with major currency pairs stuck in tight ranges versus the Dollar. The risk is probably biased towards higher volatility as we head towards mid-December.
