2018.05.0121:55:00UTC+00Slowing UK Factory Growth to Sharply Weigh on Chance of BoE Rate Hike

U.K. manufacturing slowed more than expected in April while consumers borrowed at the softest pace in 5-½-years in March, sending sterling tumbling and also further reduces the likelihood of an interest rate hike by the Bank of England next week.

According to IHS Markit, its monthly Purchasing Managers Index was at 53.9, from a downwardly revised 54.9 in March. A 17-month low, it was worse than economists had forecast and hardened expectations the Bank of England will refrain from raising borrowing costs on May 10.

IHS Markit said weakness centered especially around producers of consumer goods who have been hit by the reduced spending power among households caused by last year's rise in inflation. They also added that optimism among manufacturers dipped to a five-month low in April as concerns about Brexit, trade barriers and the overall economic climate remained widespread.

Separate figures from the BoE showed consumers borrowing slowed sharply in March, in line with earlier data showing a large decline in retail sales that month. BOE figures showed unsecured credit increased by only 254 million pounds ($348 million) in March, the least since November 2012. Mortgage approvals meanwhile dipped to the lowest level this year.

Official figures on Friday showed Britain's economy barely grew in the first three months of 2018, with heavy snow only partly to blame.

The pound fell as much as 0.7 percent after the reports. The sterling has fallen for 10 of the past 11 days, after hitting $1.4377 on April 17, its strongest since the quick aftermath of the Brexit vote in June 2016.

Prior to the recent reports, BOE Governor Mark Carney had said economic data had been mixed and suggested the BoE might wait rather than hike rates to a new post-financial-crisis high of 0.75 percent on May 10.