The pound posted a mixed performance yesterday, gaining over half a percent against the dollar but losing marginal ground against the euro. A smaller than expected fall in UK manufacturing output provided the currency with limited support. However, the majority of the pound’s strength came from a 1.2% rise in industrial output.
The impact of the positive manufacturing and output data on the pound was limited, as investors continue to question the effect that Brexit negotiations are going to have on the UK economy and the subsequent likelihood of a Bank of England rate hike.
A lack of economic data releases today is likely to see focus fall to wider markets. However, if uncertainty continues in the US the pound may be able to continue to make gains against the greenback.
The euro largely mirrored the pound yesterday, trading broadly flat against sterling while gaining over half a percent against the dollar. A recent batch of positive German industrial output and export numbers provided the currency with support, which was backed up by an easing of nerves regarding the ongoing Catalonian call for independence.
Catalan leader Puigdemont announced that he would delay the separation announcement in order to foster talks, sparking hopes among some investors that complete separation between Spain and Catalonia was not yet a done deal.
A lack of economic data releases today could leave investor focus on wider markets.
The dollar performed poorly yesterday, losing an average of half a percent against the pound and the euro after US Redbook data came out worse than expected. This poor economic data combined with a growing concern amongst investors that Donald Trump’s tax reform plan may struggle to be passed into legislation.
Today we have the release of US JOLTS job opening data, which looks set to fall by 45,000 and may apply yet more pressure on the currency. If this is the case then the greenback may continue to perform in a similar manner as yesterday.
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