The Pound began local trading in a positive position, heading for five-day gains against peers like the Euro and US Dollar as investors dwelt on the UK’s improving economic outlook and the Bank of England’s decision to leave stimulus unaltered.
However, Sterling swiftly shed gains, trimming its 0.4 per cent five-day advance the US Dollar, as construction, industrial and manufacturing output figures for the UK failed to reach forecast levels.
Earlier in the European session figures compiled by the British Retail Consortium showed that a measure of annual retail sales increased by 0.4 per cent in December, the eighth monthly rise but half the gain expected by economists.
This was followed by lacklustre output figures.
While industry experts believed UK manufacturing production would increase by 0.4 per cent in November, month-on-month, it actually stagnated following a 0.2 per cent gain in October which was smaller than originally forecast.
Month-on-month industrial production was also unchanged.
Seasonally adjusted construction output plummeted by a whopping 4.0 per cent in November rather than rising the 0.8 per cent expected.
These latest reports follow last week’s manufacturing, construction and services PMI’s, which also fell short of estimates.
The results were disappointing and led one London-based industry expert to comment; ‘GDP growth in the fourth quarter is unlikely to be quite as strong as the business surveys have indicated. [But] 2014 should be a year of continued expansion in industrial production.’
Similarly, when the Pound softened against the US Dollar and Euro in response to this development forex strategist Gavin Friend stated; ‘The market is long of Sterling and has pushed it lower on the back of this data. There’s enough momentum in the UK economy and a danger of over-interpreting what this number means.’
That being said, if today’s UK NIESR GDP estimate for December also disappoints the Pound could extend declines before European markets close for the weekend.
In the hours ahead US news, including the highly influential US non-farm payrolls report, is likely to impact the GBP/USD pairing.
Current Pound Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6405 ,
Pound Sterling,,Euro,1.2067 ,
Pound Sterling,,Australian Dollar,1.8454 ,
Pound Sterling,,New Zealand Dollar,1.6456 ,
US Dollar,,Pound Sterling,0.6093 ,
Euro,,Pound Sterling,0.8287 ,
Australian Dollar,,Pound Sterling,0.5419 ,
New Zealand Dollar,,Pound Sterling,0.5008 ,
[/table]
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