Poor UK Public Sector Borrowing Data Could Hold Back GBP EUR Exchange Rate

November 21, 2012 - Written by Minesh Chaudhari

STORY LINK Poor UK Public Sector Borrowing Data Could Hold Back GBP EUR Exchange Rate

Given the prevalence of worrying geo-political events and the grim economic data releases over the past twenty four hours, it is perhaps surprising that global stock markets have registered a relatively respectable performance so far today.

Last night’s dismal Japanese trade data showed that the level of exports in Asia’s second largest economy dropped for the fifth month on the trot in October. The continued contraction in shipments from the Japanese economy was attributed by analysts on weak levels of demand from Japan’s key trading partners China and the eurozone.

Elsewhere, there was relatively disappointing news for the Pound this morning, when the minutes of the latest Bank of England monetary policy committee meeting and public sector net borrowing figures for last month were released. The minutes revealed that the nine-man BoE committee was divided on whether to add to the GBP375bn already allocated to the UK’s controversial Quantitative Easing programme. The latest UK government borrowing data provided further bad news for Sterling, revealing that Britain’s coalition government increased the nation’s indebtedness by a far larger than anticipated £6.5bn last month. In spite of the disappointing news, Sterling has still managed to register gains against the majority of the other sixteen most-actively traded currencies on the session.

Meanwhile, this afternoon’s session in the States has begun with a disappointing set of Initial Jobless Claims data, which showed that there were 410,000 new unemployment claims in the US in the week beginning 10th November. Hardly an encouraging sign. Market participants have reacted to the news by turning against the Greenback, sending the GBP USD exchange rate up to 1.5948 this afternoon. This is the highest rate on Cable since 9th November.

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