(eToro Blog) The release of worse than expected U.K. manufacturing data coupled with a media report which claimed that a scheduled IMF payment to Greece would be withheld has led to a broad sell off in the Pound Sterling and the common currency Euro, respectively. According to the Chartered Institute of Purchasing & Supply, the Purchasing Manager's Index which captures business sentiment in the U.K. manufacturing sector slipped to 52.1 in May from April's downwardly revised 54.4; analysts' consensus had predicted that the numbers would show a decline to only 54.3.

One currency strategist said that the actual PMI data would need to be significantly lower than anticipated, say to 53, to give rise to market panic. According to him, because the manufacturing sector tends to be so cyclical anyway, disappointments are generally better accepted and to some extent, fleeting.

As regards the ongoing saga of Greece's fiscal troubles, one German media outlet reported that Greece's inability to meet a mandated budget deadline last year may result in the withholding of the IMF's share of Greek aid. That claim has not yet been substantiated by the IMF, however.

Any potential losses for the Euro are being tempered by renewed speculation that an ECB rate hike might be back on the table. Yesterday, it was reported that inflation in the Eurozone slowed slightly from the previous period but continues to be higher than the ECB target.

The Pound Sterling is trading lower against the U.S. Dollar, while the Euro managed to rebound from its initial decline. On the eToro trading floor, sentiments among traders of the EUR/USD pair are bullish in favor of buying by a ratio of 11 buyers to 2 sellers. It's a different story for the traders of GBP/USD, where selling dominates by 17 sellers to 6 buyers. Among traders of EUR/GBP, selling sentiment dominates by 8 sellers to 3 buyers.

Copyright 2011 eToro Blog

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