Tuesday 9th December 2014
Yesterday's gains for the Pound and Sterling/Euro in particular were again short lived, with the GBP/EUR exchange rate today dropping back towards €1.26:
UK Industrial and Manufacturing production disappoints
The reason for the drop today is due to worse than expected UK Industrial and Manufacturing. As the figures were lower than expected it weakened the Pound pulling exchange rates lower. This is because expectations of when interest rates may start rising will most likely be pushed back in the light of the poor figures. The Bank of England has signalled it will keep interest rates low well into 2015 as earnings struggle to grow more than inflation.
The UK GDP estimate released at 3pm today was as expected, so didn’t have any effect on exchange rates.
This afternoon, we saw some Euro strength which pushed GBP/EUR lower, and caused flows out of the US Dollar. This caused the GBP/USD rate to recover to the $1.57 levels.
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