httpvh://www.youtube.com/watch?v=wrLSIyoa_2g

·         Manufacturing output falls unexpectedly

·         Fears over exports continue

·         RBNZ keep rates at 2.5%

All this and more is available on our blog. Click here  http://www.worldfirst.com/blog

It never rains, it pours in currency land for sterling at the moment with yesterday seeing yet more weak data published and dragging the pound lower.

The manufacturing sector had been one of the few bright spots on the UK data scene in 2010 with strong Purchasing Manager Indices and good confidence levels. Yesterday’s news that output had dipped by 0.9% when the market had expected a 0.2% rise kicked the pound below the 1.10 level against the EUR and into the 1.48s against the USD. This obviously compounded the negativity in the market already given Tuesday’s abysmal trade data.

The euro capitalised on this sterling weakness as prospects for the European economy improved. The euro was 0.4% higher against the USD on the day reaching a high of 1.3672.

Overnight the RBNZ has kept its interest rates on hold at 2.50%. Kiwi dollar sold off in the aftermath as the accompanying statement was slightly more dovish than the market had reckoned with the RBNZ talking down inflationary pressures. We do expect 2 rate hikes in New Zealand within the next 6 months however.

The quiet data calendar continues today. The Bank of England are due to publish their latest inflation attitudes survey at 09.30. This is a public survey on the performance of the Bank of England and what the general public expect of inflation and interest rates in the future. We also have the US trade balance figure at 13.30 alongside the typical initial jobless claims release.

Sterling will stay under pressure today although as long as it stays off new lows the short term outlook retains some positivity