Pound Sterling Forecast: GBP to Euro and Dollar Deteriorates on Weak UK Industrial Data

February 10, 2015 - Written by John Cameron

STORY LINK Pound Sterling Forecast: GBP to Euro and Dollar Deteriorates on Weak UK Industrial Data

The Pound Sterling (currency:GBP) has put in an ‘in and out’ sort of performance during today’s session as investors worried that the UK’s economic recovery may be about to be put to the test.

This morning’s UK Industrial Output data for December ensured that the Pound got off to a weak start. The closely-monitored figured showed at a year-on-year 0.5% versus a November showing of 1.1%, suggesting that this key sector of the British economy is beginning to feel the strain. Analysts blamed the below-par performance on a decrease in oil and gas output as North Sea extractors cut back on activity levels as wholesale prices dropped.

Meanwhile, this afternoon’s NIESR Gross Domestic Product forecast suggested that the domestic economy expanded by 0.7% during the three months to the end of January, which in itself was not a bad result for the Pound. However, the downward revision to 0.5% for the previous month’s figure was unexpected and suggests that the UK economy put in a tame showing as last year drew to a close.

Elsewhere, the latest unemployment from Switzerland revealed that the level of seasonally adjusted joblessness had, against analysts’ expectations, edged lower to a rock bottom 3.1% during January. The figure acted as a reminder to investors that the Swiss economy remains a good bet and the Pound Sterling Swiss Franc exchange rate dropped to an intraday low of 1.4037 as a consequence. GBP CHF had plunged into the 1.1100s on the morning that the Swiss National Bank announced that it was ditching its minimum floor of 1.2000 on the EUR CHF exchange rate last month. The intervening period has seen the Pound steadily climb against the Franc, but today’s economic statistics from Berne have led analysts to forecast that GBP CHF may now be due a fall.

Looking ahead, data highlights for the remainder of this week include Thursday’s Australian unemployment figures which will inform investors’ predictions regarding the next move from the Reserve Bank of Australia, and Friday’s whole of eurozone Gross Domestic Product data for the three months to the end of December.

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