Pound exchange rate slumps following shock contraction in UK industrial output
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The Pound was forced to retreat again at the start of this week’s session, as some lacklustre UK economic data saw markets shun the currency.
What’s been happening? The pound was placed on the back foot at the start of this week’s trading session, as markets reacted to some disappointing UK data. The release of the UK’s latest trade figures dragged on Sterling sentiment this morning as the UK’s trade deficit unexpectedly swelled from -£3.22bn to -£5.28bn in April. However it was the UK’s accompanying trade production figures which proved to be the most damaging for the pound as the currency was rocked by a shock 0.8% contraction in factory output. This drop in the pound also extended the losses in the GBP/EUR exchange rate, which came under pressure this morning as the euro was buoyed by comments from Italy’s new economy minister Giovanni Tria, in which he ruled out leaving the single currency. Meanwhile the GBP/USD exchange rate is also trending lower this morning, as markets shrug off the spat between President Trump and other world leaders at the G7 summit over the weekend and instead focus on tomorrow’s US-North Korean summit. Looking forward, GBP investors will be hoping that tomorrow’s employment data may help to grant some respite for the pound.
While the UK’s unemployment rate is expected to have remain unchanged in April, a possible uptick in domestic wage growth could see Sterling sentiment tick higher.
Meanwhile a lull in Eurozone data may leave the euro a little muted in trade today, with the single currency reliant upon external factors to drive momentum.
Finally the US dollar is likely to hold steady in the first half of this week’s session as markets await the Federal Reserve’s latest policy meeting on Wednesday.