Busy Day for the Pound

Currency Update

Thursday 12th May at 09:15 - £1.00 GBP = 1.2644 EUR

A Busy Day

A busier day on the data front yesterday for the pound with manufacturing production, industrial production and GDP estimates all missing forecasts, although improved on previous readings. Following the industrial production numbers the figures highlighted that the UK industry has fallen back into recession for the third time in eight years, with the main contributors being the fall in steel and iron production.

GDP Estimates

The Office for National Statistics stated that production dropped over 37% in this sector compared to a year earlier. Manufacturing also contracted contributing to a slowdown in the overall UK economy. Chris Williamson chief economist at 'Markit' stated, "The goods producing sector therefore looks to be on course to act as a drag on the economy again in the second quarter, contributing to a slowing in economic growth to near stagnation." The NIESR GDP estimates posted a figure of 0.3% down from the previous 0.4% reading. The NIESR argued that the slowdown in this growth has been down to concerns surrounding the referendum. Also stating that if the UK was to leave the EU then sterling would slide by a fifth with inflation spiking higher.

EU Referendum

Elsewhere in the news, George Osborne continued his campaign to keep the UK in the EU by stating that the Bank of England would face a big challenge if we were to leave with monetary policy proving difficult to manage and the UK having to deal with a number of impacts on the financial system.

The Day Ahead

For the day ahead, we have more from a data perspective, with the return of Super Thursday which includes the May monetary policy meeting along with May's inflation report, and finally a press conference from BoE Governor Mark Carney. May's inflation report will garner the most attention as the market will be watching for any updates on April's cautious tone, however, excluding any surprises we are more likely to see a flat Thursday as opposed to the former.

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