British Pound Sterling: Currency gets a boost vs Euro as industrial production data springs a surprise, but currency flat vs USD

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Published on Tuesday, 10 July 2012 13:49

Written by Will Peters

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While GBP-EUR advances we see GBP-USD is flat with a number of analysts maintaining a bearish stance towards the pair.

The pound sterling (Currency:GBP) has advanced yet further against the euro, placing the currency well into territory note seen in well over three years.

The pound euro exchange rate is 0.23 pct higher than at Monday night's closing level at 1.2693 at 14:40 in London.

The pound dollar exchange rate is unchanged at 1.5528. The pound Australian dollar exchange rate is 0.24 pct in the red at 1.5180.


"Sterling is flat from yesterday’s close, despite having seen a 0.3% jump initially following the release of better than expected industrial production (less contraction) and trade data (narrowed deficit). MPC member Posen has spoken about QE, stating that he does not expect the BoE to engage in any future purchases of private assets, highlighting policymakers’ preferences to keep buying government bonds," says Eric Théorêt at Scotiabank.

Today’s IP data was stronger than expected with total IP at +1.0% M/M in May, and manufacturing production at +1.2%, compared to the small declines for both that the market was looking for.

"However, the data was impacted by one additional working day in May, with the regular late-May bank holiday moved back to June to coincide with the Jubilee holiday. Outside of this impact, the underlying pace of manufacturing production was probably slightly negative," says Shaun Osborne at TD Securities.

Scotiabank advise that they are bearish on the pound to dollar rate: "consolidation seen around 1.5500, with limited range."

Also bearish on this currency pair is UBS, a morning note from the bank says: "Focus on support at 1.5454, a breach of which would open the door for weakness towards 1.5404. Resistance is at 1.5551."