Positive UK Data Fails to Help Pound Sterling Outlook

Published: Tuesday, 9 August 2016 15:00 BST - Written by Frank Davies

STORY LINK Positive UK Data Fails to Help Pound Sterling Outlook

UK Data Positive, but Brexit Repercussions Could Weigh on Growth Forecasts

Today’s data has provided the many pessimists who have forecast the imminent demise of the UK economy following June’s Brexit decision by UK voters with some evidence that things might not actually be that bad after all.

Official figures from the Office of National Statistics (ONS) revealed that UK Industrial Production increased at its fastest pace since 1999 during the second quarter of this year. The numbers, covering the three months leading up to the end of June, revealed a healthy 2.1% uplift in comparison to the first three months of this year. Hardly stellar, but nonetheless encouraging.

Will Pound Sterling (GBP) Exchange Rates be Supported if UK Outlook Brightens?

Cynics will point out the three month period only contained one week of post-Brexit decision Britain, (the days between 24th June and the end of the same month), but the mere fact that the pre-Brexit slowdown was less pronounced than some had feared could be enough to support the Pound Sterling (currency : GBP).

The accompanying report from the ONS noted that,

‘The largest contribution to the quarterly increase in total production came from manufacturing, which increased by 1.8%. The largest contribution to the increase in manufacturing came from the manufacture of transport equipment, which increased by 5.6%.

Total production output is estimated to have increased by 1.6% in June 2016 compared with June 2015. There were increases in all of the main sectors, with the largest contribution coming from manufacturing (the largest component of production), which increased by 0.9%.’

However, the report struck a decidedly less go-ahead tone regarding the UK’s performance in the immediate lead-up to the referendum, stating that,

‘Total production output is estimated to have increased by 0.1% in June 2016 compared with May 2016. There were increases in 3 of the 4 main sectors, with the only downward contribution coming from manufacturing, which decreased by 0.3%. There were decreases in 9 of the 13 manufacturing subsectors, with the largest contribution coming from the manufacture of transport equipment, which decreased by 1.0%.’

GBP/EUR, GBP/USD Exchange Rates Decline, Further Losses Forecast

Elsewhere, there was another positive data release earlier today from the British Retail Consortium (BRC). Their survey, which covered the exclusively post-Brexit month of July, found a year-on-year increase of some 1.9% in the level of UK shop sales. However, the news did not provide the Pound with any tangible support; the UK unit slid to 1.1666 against the euro (currency : EUR) and to 1.2954 against the US Dollar (currency : USD). Analysts forecast that there could be further losses to come for these key pairs.

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TAGS: Currency Predictions Daily Currency Updates Poun Forecasts