British Pound: UK Manufacturing Rebounds, Prices Hit 9 Year High

Despite the gloomy outlook for the UK economy, manufacturing activity accelerated in the month of March.

The US dollar has weakened significantly against the British pound over the past few months but the pound’s weakness against the Euro has helped to offset the slowdown in US demand. Employment increased modestly but prices hit a 9 year high indicating that manufacturers are passing on their costs to consumers. This explains why the Bank of England is so concerned about inflation. Another rate cut this month will be a close call as inflationary pressures bump heads with deteriorating growth; Consumer prices are well above the Bank of England’s 2 percent target while house prices are at 12 year lows.