The Pound Sterling (GBP) to Euro (EUR) Exchange Rate fell back below the 1.26 level on Wednesday as data showed that industrial and manufacturing production in the UK increased less than forecast in June, adding to signs that the nation’s economic recovery is softening.
According to the Office for National Statistics, Industrial production rose by 0.3% in June, a recovery from the -0.6% seen in May but was below economist expectations for an increase of 0.6%.
The data also showed that second quarter output also disappointed by rising by 0.3%, below analyst forecasts for a rise of 0.4%.
Year-on-year, U.K. manufacturing production rose by 1.9% in June from a year earlier, confounding expectations for a 2.1% gain, after a 3.7% increase in May.
Earlier in the session, Sterling was also weakened by the release of a report by the British Retail Consortium, which showed that store prices declined by an annual rate of 1.9%, the biggest drop seen since 2006.
Food price inflation also slowed to a record low level of 0.3%.
The Pound is likely to come under further pressure on Thursday as the Bank of England is due to hold its latest Monetary Policy Committee meeting.
The markets are widely expecting that policy makers will maintain interest rates at the record low level of 0.5% and maintain its monthly quantitative easing programme at £375 billion.
Sterling fell against the majority of its most traded peers including the US Dollar after the data was published.
Market sentiment is also under pressure as concerns grow over the situation in Ukraine.
A build-up of Russian troops along the Ukrainian border has heightened concerns that Moscow could be considering direct intervention in the conflict zone.
According to a NATO official, Russia now has about 20,000 troops stationed “in an area along the entire border with eastern Ukraine.” The build-up nearly doubled the troop deployment in the last week by adding 8,000 more forces to 12,000 already there, the official said.
As a result, the Pound was maintaining ground against riskier emerging market assets such as the Indian Rupee (INR) and Turkish Lira (TRY).
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6858 ,
Pound Sterling,,Euro,1.2598 ,
Pound Sterling,,Australian Dollar,1.8072 ,
Pound Sterling,,New Zealand Dollar,1.9952,
US Dollar,,Pound Sterling,0.5933 ,
Euro,, Pound Sterling ,0.7934 ,
Australian Dollar,, Pound Sterling ,0.5525 ,
New Zealand Dollar,,Pound Sterling,0.5007 ,
[/table]
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