Pound Falls As U.K. Trade Deficit Widens, Industrial Output Contracts
The pound weakened against its major counterparts in the
European session on Friday, as the nation's visible trade deficit
widened in December and industrial production declined due to the
outage of the North Sea Forties pipeline.
Data from the Office for National Statistics showed that the
visible trade deficit rose to GBP 13.57 billion in December from
GBP 12.45 billion in November. The expected level of shortfall was
GBP 11.55 billion.
Separate data showed that U.K. industrial output decreased 1.3
percent month-on-month in December, which was the first fall in
nine months. Economists had forecast output to fall 0.9 percent
after expanding 0.3 percent in November.
Meanwhile, manufacturing output grew 0.3 percent, faster than
the 0.2 percent rise seen in November. The rate came in line with
expectations.
Investor sentiment faded amid worries over rising bond yields
and budget disputes in Washington.
The currency was higher against its most major counterparts in
the Asian session after the Bank of England hinted at somewhat
earlier and deeper-than-expected rate hikes to tackle stubbornly
high inflation.
The pound retreated to 151.58 against the yen, from a high of
152.76 hit at 3:45 am ET. The pound is likely to find support
around the 150.00 level.
Data from the Ministry of Economy, Trade and Industry showed
that Japan's tertiary activity index decreased unexpectedly at the
end of the year, though slightly.
The tertiary activity index dropped 0.2 percent month-over-month
in December, reversing a 1.1 percent rise in November. Meanwhile,
economists had expected a 0.2 percent increase for the month.
Pulling away from an early high of 1.3987 against the greenback,
the pound edged down to 1.3883. The next likely downside target for
the pound is seen around the 1.37 level.
The pound eased back to 1.3015 against the Swiss franc, after
advancing to 1.3125 at 2:45 am ET. If the pound falls further, 1.28
is seen as its next downside target level.
Data from the State Secretariat for Economic Affairs showed that
Switzerland's unemployment rate remained unchanged in January.
The jobless rate came in at seasonally adjusted 3.0 percent in
January, the same rate as seen in December.
The pound reversed from an early high of 0.8779 against the
euro, dropping to 0.8829. The pound is seen finding support around
the 0.90 area.
Looking ahead, Canada jobs data for January and U.S. final
wholesale inventories for December will be out in the New York
session.
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