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FxPro Forex Analysis: Poor British statistics add pressure on sterling

Britain’s statistics continue to indicate a slowdown in the UK economy. Today’s data showed a decline in industrial production by 0.8% during April against a forecast growth of 0.1%. The manufacturing industries, strong indicators of economic activity, lost 1.4% during the same period. The growth rate for the last year slowed from 2.9% to 1.8% and 1.4%, respectively. After such disappointing data, Sterling was subjected to a serious sale, losing 0.6% in less than two hours to trade down to the 1.3350 area hitting one-week lows.

UK_IndProd_180611-2

Such weak indicators indicates that the UK economy lost growth momentum even without the Bank of England having to raise rates. The earlier reported spike was based on a sharp weakening of GBP after the referendum on Brexit. This effect is now diminishing leaving only negative side effects among them near-record foreign trade deficit. The deficit grew to 14 Billion in April, according to data also published today, which is the second minimum value in history.

UK_TradeBalance_180611

Additionally we saw weak data for the construction activity. After a fall of 2.3% in March it has only marginally recovered to 0.5% against an expected 2.4%. Following these data releases the estimation of growth of economy for three months up to May from NIESR did not reach expectations, pointing to a sluggish 0.2% growth.

UK_NIESR_180611

It is very likely that this will not be the last of disappointing news from Britain. Tomorrow the markets will pay attention to UK employment data. A series of weak data, including today’s, noticeably reduces expectations from the labor market, but can further pressure the British currency if it fails to present a positive outcome.


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