Sterling exchange rates remain under pressure following last week’s Bank of England decision to cut interest rates to 0.25%. The issue for the pound here on is that the Bank of England governor Mark Carney has made clear that he may look to cut rates again this year if the economic outlook deteriorates further. For this reason alone the pound is likely to remain on the back foot. The political volatility has also slowed down over the summer holidays as to be expected so the markets are now being largely driven by the economic data.
Industrial production and manufacturing production numbers both released tomorrow are likely to have an impact on the price of sterling. Recent indicators for these sectors have shown a gloomy outlook so anything negative in these figures could also be unwelcome for the pound. These numbers however are the official data from National Statistics and hence will carry some weight.
The reality however may be that these sectors are not performing as badly as some are suggesting and there could actually be a rally for the pound on a stronger data set. With no other UK data releases this week this is likely to dominate the headlines on an impressive number. Inflation numbers next week should be more interesting as should the unemployment numbers. Little change here could send the right signals to the markets with a boost for the pound. I am more positive here for the UK and I struggle to see a weakening in unemployment so soon after Brexit.
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