The Pound Sterling (GBP) Exchange Rate was little moved against the US Dollar (USD) and other peers on Tuesday, but pushed higher against the weakened Euro (EUR) due to the publication of mixed economic data.
The first data release of the day was published earlier in the session and showed that the UK’s budget deficit was higher than forecast in June.
According to the report released by the Office for National Statistics net government borrowing was down slightly to £11.4 billion compared with the previous year’s figure of £11.5 billion.
The figure was worse than the £11.1 billion figure expected by economists.
Government spending increased by 3.9% whilst revenue climbed by 4.7%.
Despite the softer data the UK Treasury insisted that the nation’s public finances are on track.
‘The government’s long term economic plan is working, delivering economic security for hardworking people. Today’s public sector net borrowing figures continue to be in line with the budget forecast which predicts the deficit to have halved by the end of this year’ the Treasury said in a statement.
Potential losses from the borrowing data was restrained after another data release showed that the recovery in the UK’s manufacturing sector continued strongly in the last quarter.
According to the latest Confederation of British Industry’s quarterly Industrial Trends Survey manufacturing firms are feeling confident as total orders climbed to its strongest level in more than 19-years.
The survey of 481 firms reported strong growth in new orders in the three months leading to July. Domestic orders hit their best rate since 1988 and the number of workers employed in the manufacturing sector continued to rise strongly.
Looking to the year ahead, manufacturers’ plans for investment in product and process innovation are at their strongest since 1989, with robust plans for spending on plant & machinery, and buildings. The number of firms investing to expand capacity reached new record highs from the previous one recorded in 1979.
‘The recovery in the manufacturing sector is keeping a good pace. Industry is performing well as orders and hiring are on the up, and investment intentions for the year ahead are looking healthy across the board. It is not all plain sailing however, and there are still risks to the recovery. These include increasing international political instability, and the recent rise in sterling, which could be weighing on exports. We need to continue to help manufacturers to export their products to high-growth markets across the globe, to give a healthy and sustainable boost to the UK’s recovery,’ said Katja Hall, CBI Deputy Director General.
The positive data raises the likelihood that Friday’s UK GDP growth data will come in strongly. Economists are widely forecasting that the economy expanded by 0.8% on a quarter on quarter basis and by 3% on an annual basis. Thursday’s retail sales data will add to expectations if it too comes in positively.
The Euro meanwhile remains under pressure from risk aversion as investors remain concerned over the situation between the West and Russia following the downing of a passenger jet in eastern Ukraine. Market attention will likely be focused on a meeting of euro zone foreign ministers later on Tuesday to discuss further sanctions against Russia.
Pound Sterling (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.7066 ,
Pound Sterling,,Euro,1.2654 ,
Pound Sterling,,Australian Dollar,1.8172 ,
Pound Sterling,,New Zealand Dollar,1.9681 ,
US Dollar,,Pound Sterling,0.5860 ,
Euro,, Pound Sterling ,0.7899 ,
Australian Dollar,, Pound Sterling ,0.5502 ,
New Zealand Dollar,,Canadian Dollar,0.9312 ,
[/table]
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