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Pound Sinks, GBP/EUR, GBP/AUD, GBP/NZD, GBP/JPY Exchange Rates Drop after UK Data

January 10, 2018 12:17 pm | Modified September 4, 2018 7:19 am
AUD, EUR, GBP, JPY, NZD | BY Ashleigh Fox

The Pound Sterling exchange rate has fallen on Wednesday after a mixed bag of economic data. The British currency sank below 1.13 against the Euro (GBP/EUR), and noted hefty losses against the Australian Dollar (GBP/AUD), New Zealand Dollar (GBP/NZD), and Japanese Yen (GBP/JPY).

The UK Industrial Production figure grew by 0.4% in November, but the annual figure declined to 2.5% from 4.3%, but still remained higher than the more pessimistic 1.8% forecast. Monthly growth in this reading has continued for eight months in a row, highlighting the longest period of expansion since 1994.

Meanwhile, the manufacturing sector also managed to beat forecasts. The November Manufacturing Production reading showed monthly growth came in at 0.4% rather than the 0.3% prediction, and the annual figure declined less than expected from 4.7% to 3.5%.

Construction Output figures were also published this morning, with the month falling below expectations at only 0.4% growth, but the annual figure managed to come in at 0.4% too, after positive revisions to November’s reading.The UK’s total trade deficit also narrowed.

Scotiabank economist Alan Clarke said:

‘UK GDP [Gross Domestic Product] growth for the 4th quarter of 2017 is looking good again after some encouraging industrial and construction output data for November. These are the last concrete official monthly data that feed directly into the GDP arithmetic and give us the best clues to the likely growth rate when the data are released on 26th January.’

Additionally, the manufacturers’ trade body EEF stated how businesses were enjoying an upswing in positive sentiment for 2018 with exports increasing at a faster pace than imports which allowed the trade deficit to shrink.

Meanwhile, in New Zealand, the Kiwi Dollar was able to rally, despite there being no domestic data out to support the currency. The antipodean currency outperformed the Australian Dollar on Tuesday and continued its impressive performance as markets went into the middle of the week.

On the other hand, the Australian economy has produced several ecostats this week, such as the AiG Performance of Construction Index which came in at 52.8 in December, falling from November’s higher 57.5. Additionally, the Australian weekly Consumer Confidence Index edged up to 122.0 following the previous week’s 116.5. Building Approvals data showed that November kept up the pace, coming in at 17.1% rather than the 4.6% economists had expected.

The Japanese Yen is also climbing against the Pound (JPY/GBP) as investors continue to digest the news that the Bank of Japan (BoJ) will be trimming its bond purchases, in a move that has led many to believe its a small step in easing its ultra-loose monetary policy stance.

Although there’s little Eurozone data out today, a few pieces have been released this week. German Industrial Production soared in November at 3.4% on the month which allowed the annual figure to jump from 2.8% to 5.6%. Additionally, the Eurozone Unemployment Rate sank from 8.8% to 8.7% in November.

The GBP/AUD exchange rate is at interbank levels of 1.7246.
The GBP/EUR exchange rate is trending at 1.1283.
The GBP/JPY exchange rate is trading at 150.909.
The GBP/NZD exchange rate resides at 1.8776.

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