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- Mar, 10 Overnight Interest Rate Update 03.10.10
- Mar, 10 Australian Home Loans Drop Most in Nearly a Decade on Rates, Grants
- Mar, 10 Australian Consumer Confidence May Fall on Rate Hikes, Says Westpac
- Mar, 09 Swiss CPI Fails to Impress
- Mar, 09 Overnight Interest Rate Update 03.09.10
- Mar, 08 China Weekly 03.08
- Mar, 08 Overnight Interest Rate Update 03.08.10
- Mar, 08 Japan's Current Account Surplus Tops Forecasts on Exports
- Mar, 05 U.S. Unemployment Rate Unchanged As Economy Losses 36K Jobs
- Mar, 05 German Factory Orders Advance More-Than-Expected, Euro Halts Two-Day Advance
- Mar, 05 Overnight Interest Rate Update 03.05.10
- Mar, 04 Overnight Interest Rate Update 03.04.10
- Mar, 04 AUSTRALIAN TRADE DEFICIT FALLS AS FUEL IMPORTS PLUMMET
- Mar, 03 Overnight Interest Rate Update 03.03.10
- Mar, 03 UK Consumer Confidence Rises, Impact on Growth Seen Limited
- Mar, 03 Australian GDP Gains as Expected But Markets Left Disappointed
- Mar, 02 BoC Remains On Hold But Loses Flexibility As Inflation and Growth Beat Forecasts
- Mar, 02 Overnight Interest Rate Update 03.02.10
- Mar, 02 Japan’s Jobless Rate Unexpectedly Falls, Overall Employment Still Lackluster
- Mar, 02 Australian Retail Sales Top Expectations, Still Below Trend Growth
Overview
Manufacturing in the U.K. unexpectedly declined for the first time in five months, with the reading pushing 0.9% lower in January after rising 0.9% the month prior, while economists forecasted a rise of 0.2%. At the same time, the annualized reading rose 0.2% during the same period, missing expectations of 1.4%, a sign that manufacturing is struggling to shake off the nation’s longest recession on record, the Office for National Statistics in London said today. Meanwhile, industrial production, which includes utilities, mining and quarrying, shed 0.4% in January amid expectations for a 0.3% rise, with the reading losing 1.5% from a year ago, and Prime Minister Gordon publicized that U.K.’s economy is still “fragile” and in its early stages of recovery. However, fears of a protracted recovery may continue to weigh on the manufacturing in addition to the exchange rate during the week as policy makers see an ongoing weakening in the private-sector.
Market Reaction
Looking at the minute chart, the British Pound tumbled against the greenback immediately following the dismal data, reaching a low of 1.4890.
Minute Chart
Charts prepared by Michael Wright, Daily FX Research
Forecast
Looking ahead, investors are weighing in a zero percent chance that the Bank of England will raise interest rates twenty five basis points at its next rate decision meeting on April 8th, according to the Credit Suisse overnight index swaps. Previously, on March 8th, policy maker Kate Barker stated that the U.K. faces a “bumpy” recovery and manufactures haven’t yet benefited from the drop in the pound. From a technical standpoint, we may see the GBP/USD continue to retrace the advance from last year as policy makers continue to hold a cautious outlook for the economy.
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Written by Michael Wright, DailyFx Research
Questions? Comments? Email me at mwright@fxcm.com
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