It’s been a muted week of trade for the pound, and despite a couple surprises in the latest data releases this morning the market reaction has been minimal. A better than expected GDP print will likely make the headlines, with a month-on-month increase of 0.2% higher than the +0.1% forecast and the +0.1% seen last time out. While this is a slight positive surprise it won’t materially change the overall level of growth seen in the final quarter of 2018 which remains sluggish at best.
Countering the beat in growth figures is a rather soft data point from industry, with manufacturing production unexpectedly falling by 0.3% compared to the prior month, with consensus calling for a rise of 0.4%. This is now the 4th time in the last 5 readings that this metric has come in worse than forecasts and suggests the sector is not performing as well as many would have hoped.
Both the industrial and manufacturing production figures have declined of late, in what is a worrying development for the broader economy. Source: XTB Macrobond
Given the fast approaching meaningful vote on PM May’s deal next Tuesday, traders are understandably taking these data points with a pinch of salt and from their perspective they are far more interested in the latest Brexit developments than economic data for the time being.
The pound has dipped to its lowest level since Tuesday against the US dollar in recent trade and the other side of this pair could well be the main driving force today, with the buck potentially sensitive to this afternoon’s US inflation figures.
The GBPUSD has been in an unusually narrow range this week of just 90 pips. The market appears to be biding its time before receiving further clarity on where the Brexit saga will twist and turn next. Source: xStation
The FTSE has made a bright start to the final session of what has so far been a good week, with the benchmark adding over 50 points and trading back around the key psychological 7000 level. The market has notched its highest level in 5 weeks and is recovering fairly well from the rout which hit global equity markets in the latter parts of 2018.