A poor month for UK manufacturing and construction figures saw the Pound lower against most major counterparts. The Bank of England's Mark Carney has warned the Government to maintain an open financial system to avoid huge job losses.

A poor month for UK industrial and manufacturing data

The Pound had a poor start to the day on Friday as the latest industrial and manufacturing production numbers showed a decline. The Office for National Statistics reported the surprisingly pleasant weather in the UK throughout February has meant that less gas and electricity had been used and thats why industrial output fell. As for the manufacturing numbers this is the second consecutive month that the numbers have disappointed which shows the UK economy has slowed in quarter one of 2017.

For foreign currency buyers keeping an eye on the next GDP numbers may be wise as I believe a slowdown is inevitable as manufacturing production makes up a large proportion of GDP.

All eyes turn to the Bank of England

Mark Carney warns UK politicians

Governor of the Bank of England Mark Carney in a speech at Thomas Reuters in London on Friday warned Theresa May that cutting the UK’s access to the rest of Europe would not be wise. The Governor wants to keep an open financial system that allows money to flow in and out of the UK and Europe for free and not go down the route of protectionism of banking rules. If this was the case the Government would trying to protect UK banks by restricting and restraining the Europeans however the Governor believes it would have the complete opposite effect and jobs would be lost. You only have to look at firms such as Insurers Lloyds of London, Royal London investment banks JP Morgan and Citigroup who are already making plans elsewhere, whilst HSBC have confirmed they are likely to switch 1000 jobs out of London to Paris.

My personal opinion is that the strength of the Pound will have a direct correlation to Brexit negotiations. If they go well the Pound will strengthen whereas stumbling blocks will cause falls. With the Governor also stating in his speech that European economies could be damaged if their access to London diminishes as London is and I quote “Europe’s investment banker” I am feeling optimistic that a deal will be reached that benefit both parties, however only time will tell.

Look out for inflation

The most important data release this week for the UK is Tuesday morning when Consumer Price Index also known as inflation is set to be released. The month on month figures are set to show an improvement however the important yearly figures are set to show a slight decline. The decline is to 1.9% therefore I don’t think this will have a major impact on Sterling. However if the consensus is wrong and inflation has risen above the Bank of Englands 2% target, all eyes will turn to the Bank of Englands Monetary Policy committee for hints towards raising interest rates.

For more information on how this weeks economic data could impact your foreign currency requirement, call our trading floor on 01494 725 353 or email me here and Ill be happy to reply personally.


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