Monday’s UK economic reports were nothing short of abysmal. Monthly GDP contracted significantly more than forecast while manufacturing and industrial production were no different.
Yesterday’s data has helped coax the sterling bears back to the forefront of the market. All the reports disappointed and raise the concerning prospect of a sharp slowdown in the UK economy over the coming months. April GDP printed at -0.4%, well below the anticipated -0.1% consensus forecast. Manufacturing production, expected at -1.1% month-on-month, posted a print of -3.9%. Concerning reads by any measure.
The pound reacted negatively, immediately surrendering 0.25 cents against both the US dollar and euro following the releases at 0930. Sellers continued to push which eventually saw GBPUSD’s 1.27 short-term support give way. The pound was also hit against the euro which saw it trade into the €1.11 handle before a very mild bounce.
The Tory leadership race officially began yesterday as candidates set out their vision for the future of Brexit and the UK. No doubt rhetoric will ramp up in the coming days. The pound will likely be on edge across this period (potentially 4-6 weeks), susceptible to movement based on any positive/negative commentary from any of the more popular contenders.
Today’s calendar sees a UK employment report, 3 Bank of England Monetary Policy Committee speakers as well as US inflation readings.
Written by Viv Savani. 8:47am, June 11th 2019
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