Slowdown in Production hits pound exchange rates

Tuesday’s trading started with the main data release of the week for Sterling, with Industrial and Manufacturing Production figures for the UK during the month of October. Analysts had been expecting improvement in both figures from those for September but unfortunately these expectations were not met and the pound came under some selling pressure throughout the day. Industrial and Manufacturing Production both actually contracted in the month of October, with Industrial growth coming in at 1.1% on the year and Manufacturing at 1.7%, somewhat short of the respective 1.8% and 3.2% expectations. These figures will confirm recent concerns that growth is slowing and that the UK is also being affected by the global slowdown and particular that of our European neighbours, who are of course one of our main customers when it comes to exports.

The only other announcement yesterday came from the NIESR as they estimated that GDP growth for the final quarter of 2014 is still at 0.7%, although many fear this figure will be lower in the first quarter of the new year. The markets did not react to this and nearly a cent was lost against a strengthening Euro whilst early losses were recovered against a weaker US Dollar in the afternoon.

Today is another relatively quiet day on the markets with just UK Trade Balance data to be released at 9:30am and an interest rate decision later tonight at 8:00pm for New Zealand. Markets expect rates to hold unchanged at 3.5% so it will be the accompanying statement and press conference that may provide some insight into potential changes in the future.