The Pound fell to a 3 week low against the US Dollar yesterday following the release of the UK’s industrial production data. Figures showed a decline of 0.5% from the expected 0.8% which heightened expectations that a slow economic recovery will keep the UK’s interest rates down this year.
The Euro managed to gain on the release of the 09:30 figure, the Pound fell roughly 50 pips and continued to decline during the afternoon where it stood at 1.1430 by the end of the London trading session. Further pressure was seen overnight against the Pound which left the Euro worth 88p at 9am this morning.
Better than expected German GDP data boosted the Euro this morning as the figures backed high expectations that the ECB will raise interest rates before the Bank of England. For the short term, the Euro seems to have shrugged off peripheral debt worries that have been weighing on the single currency for the past week.
The Pound is trading just off 3 week lows against the US Dollar this morning, with nothing out for the UK this afternoon we are unlikely to see much gains. The USA has a couple of pieces of data which could affect things, mainly the CPI data which is due at 13:30. Forecasted figures are slightly down on previous months, but a good inflation report would likely add further buoyancy to the US Dollar.
Next week will be very volatile, inflation reports out from both the Euro zone and the UK expect extremely choppy trading between these two. The Bank of England quarterly inflation report on Wednesday sparked hope for the Pound, if the actual figures seen on Tuesday are disappointing then the gains we have made this week could quite easily be reversed.
