Industrial data sends Pound even lower

Yesterday was another poor day for sterling, as weak UK manufacturing data was the latest thing to give the ailing Pound a further kicking.

Industrial output fell 0.7% in November – its worst decline for over 2 years, according to official data. It puts the UK’s economic recovery in context, with manufacturing increasingly fragile and the service sector left to support the recovery. After George Osborne’s warnings last week of a “dangerous cocktail” of conditions meaning a tough year ahead, it’s no surprise that exchange rates fell as confidence in the UK economy contracts sharply.

The Pound fell to its lowest rate against the US Dollar in five and a half years, and its worst rate against the Euro in a year. While last January brought the end of the Swiss National Bank’s Euro exchange rate cap, and set the tone for a weaker Euro through the year, there only seems to be pessimism for exchange rates a year further forward.

The next key figures for the UK will be fourth quarter GDP, announced on January 28th, and yesterday’s NIESR estimate forecasted a 0.6% growth figure for September to December. Anything below that would again not be good news for the Pound.

European data leads today

With little out today in terms of UK data, attention turns to Europe, where we have Eurozone industrial manufacturing (10am) and inflation figures from France, Greece and Portugal. Later on there are some minor US releases but little to look out for if you are waiting for better rates before sending money abroad. Tomorrow we have the Bank of England’s monthly interest rate announcement and press conference – some analysts are now predicting the Bank will wait until the end of the year before considering raising interest rates, and any confirmation of the same tomorrow will unfortunately be likely to hurt sterling too.