GBP EUR Exchange Rate Drops Following Weak UK Manufacturing And Industrial Production Data

Published: Tuesday, 12 March 2013 14:00 BST - Written by Ben Hughes

STORY LINK GBP EUR Exchange Rate Drops Following Weak UK Manufacturing And Industrial Production Data

Sterling endured yet another torrid opening to today’s session today following the latest in a long line of disappointing 0930hrs data releases. This time it was January’s edition of UK Industrial and Manufacturing Production data which hit the Pound, sending the GBP EUR exchange rate down to below the 1.1400 level and to within half a cent of last month’s 16-month low for the pair.

Analysts had been anticipating a relatively weak performance from the UK’s struggling manufacturing and industrial sectors for the first month of the year, however the extent of the downturn in these key sectors of Britain’s beleaguered economy came as a shock. The annualised UK Industrial Production number for January printed at -2.9% versus an expected -1.1%, whilst the counterpart UK Manufacturing Output figure showed at -3.0% against a predicted -1.0%.

The dire dual data releases served to suggest that the UK Q1 2013 GDP data, penned in for release next month, will once again show that Britain’s economy has contracted. Such an outcome would confirm that the UK has re-entered recession, condemning Sterling to yet more downside.

On a slightly more positive note for the Pound, the latest domestic Total Trade Balance data showed at a ‘less bad than expected’ -£2.362bn, compared to analysts’ expectations of a -£3.2bn print. Economists of a more cynical bent were quick to point out that the marginally stronger than anticipated figures were to a large extent attributable to the sharp weakening of Sterling in the latter part of 2012 which rapidly improved the UK’s terms of trade with its trading partners.

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