Good morning,

As mentioned in yesterday’s daily update, the pound is once again under scrutiny for data releases and external factors other than Brexit for the first time in four years.

Unfortunately, the manufacturing, industrial and GDP data release issued at 09:30 GMT yesterday were less than inspiring: all releases showed a retraction in output, including a rather menacing -0.3% reading for the overall health of the economy (GDP) before the all-important retail figure releases tomorrow. At close of trading yesterday, sterling had dropped by 0.80% against the euro and 0.65% against the dollar, with further losses recorded this morning at market open.

If posting the worst figures since 2012 wasn’t bad enough; Gertjan Vlieghe, who sits on the Bank of England’s Monetary Policy Committee, that decides interest rates, announced he was voting to cut rates in the next meeting as a response to the awful data released yesterday and presumably poor data predicted to come.

This was the third intervention from prominent BoE members, including Mark Carney, a mere two weeks into January. The message seems clear; don’t be surprised if we cut rates early on to compensate for sluggish figures – Brexit or not.

The market odds of an interest rate cut, which stood at a mere 5% at the start of last week, have now shot up to 52% – not the best start for sterling if its resolution was to maintain its post-election climb. We are a month on and -3.70% down on the euro and 4.15% down against the dollar.

Have a great day.

Author: Joshua Haden-Jones, Private Dealing Relationship Manager


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