UK PMI mnfg sinks to 17-month low in April, BoE rate hike in May unlikely

British manufacturing growth slid to a 17-month low in April, sending sterling sinking and further reducing the chances of an interest rate hike by the Bank of England next week.

The pound fell below $1.37 for the first time in 3-1/2 months after Tuesday's Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) dropped a full point to 53.9 in March, below the average forecast of 54.8 in a Reuters poll of economists.

It is the second disappointing data point in the space of a few days after official figures on Friday showed Britain's economy barely grew in the first three months of 2018, with heavy snow only partly to blame.

Separate figures from the BoE showed consumers borrowing slowed sharply in March, in line with earlier data showing a big fall in retail sales that month.

"All in all, Markit's manufacturing survey provides more evidence that the economy has fundamentally slowed this year, strengthening the case even more for the MPC to hold back from raising interest rates later this month," Samuel Tombs, economist at consultancy Pantheon Macroeconomics, said.