The pound posted a changeable performance yesterday, losing 0.3% against the dollar and trading broadly flat against the euro. A lack of economic data releases left the pound exposed to wider market pressures. However, the expectation for positive data today may have limited pressure. Despite this relatively poor performance yesterday, better-than-expected economic data in recent months and growing expectations that a Brexit deal can be forged has boosted trader sentiment towards the pound.
This morning we have had the release of UK manufacturing and industrial output data which both came out above expectation, and up from prior. Manufacturing rose by 0.3% while industrial output rose 0.4%. Off of the back of this, the currency initially gained ground across the board. However, negative political sentiment continues to weigh on the pound.
The single currency struggled yesterday, trading broadly flat against an apprehensive pound but losing over 0.3% against the dollar after positive German import and export data was countered by a poor French equivalent number.
This morning, we have had the release of French industrial output data which fell in line with expectation, down 2.4%. However, with the expectation of a 0.5% rise in German GDP tomorrow, any pressure on the single currency may be limited.
The greenback performed well yesterday, gaining an average of 0.3% against the pound and euro as investor sentiment towards the currency’s main counterparts struggled on political uncertainty. Despite this performance, the greenback’s vulnerability to wider market central bank changes reared its head again, after the Bank of Japan announced a potential shortening of its quantitative easing program which saw the US currency fall to a six-week low against the yen.
Today we have the release of US import prices which are expected to fall to by 0.2% and could see the currency lose some of yesterday’s gains.
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