GBP Takes A Dive On The Back Of Weaker Production Numbers

Published date: 11/06/2018

GBP takes a dive on the back of both weaker production numbers, as well as a widening in the trade deficit, which is now at levels seen in late 2016.  This will make a big dent in the Q1 GDP figures unless we see a material improvement from May onwards, and hopes for some counter-balance to weak Q1 performance will have been dashed.  August pricing for a rate hike will naturally be hit, with the odds having fallen short of the 50% mark, this may also detract odds for a move in November. 

Some analysts believe there is every chance the BoE will have to sit on their hands for the rest of the year, and with numbers like these, it is not hard to see why.  Cable has dropped back into the mid 1.3300's where we saw strong demand last week. Unless the jobs and inflation reports, (combined with the retail sales later in the week) can offset today's disappointing numbers, then we cannot rule out a retest of the support seen ahead of 1.3200.  No holding back EUR/GBP in the meantime, which has torn back through 0.8800 again, with traders looking set to retest the offers seen ahead of 0.8850.



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