A busier day on the data front yesterday for the pound with manufacturing production, industrial production and GDP estimates all missing forecasts, although improved on previous readings. Following the industrial production numbers the figures highlighted that the UK industry has fallen back into recession for the third time in eight years, with the main contributors being the fall in steel and iron production.
The Office for National Statistics stated that production dropped over 37% in this sector compared to a year earlier. Manufacturing also contracted, contributing to a slowdown in the overall UK economy. Chris Williamson chief economist at Markit stated, "The goods producing sector therefore looks to be on course to act as a drag on the economy again in the second quarter, contributing to a slowing in economic growth to near stagnation." The NIESR GDP estimates posted a figure of 0.3% down from the previous 0.4% reading. The NIESR argued that the slowdown in this growth has been down to concerns surrounding the referendum. Also stating that if the UK was to leave the EU then sterling would slide by a fifth with inflation spiking higher.
Elsewhere in the news, George Osborne continued his campaign to keep the UK in the EU by stating that the Bank of England would face a big challenge if we were to leave with monetary policy proving difficult to manage and the UK having to deal with a number of impacts on the financial system.
News yesterday in Europe focused on the continuing talks surrounding the Greek debt situation that is taking place in Brussels. Officials are hoping to break a stalemate regarding the €86 billion bailout package with a deadline of May 23rd looming.
12.00 – GBP: BoE Inflation Report
12.00 – GBP: Monetary Policy Summary
12.00 – GBP: Official Cash Rate expected to remain unchanged at 0.5%
12.45 – GBP: BoE Governor Carney Speaks
13.00 – USD: Initial Jobless Claims expected to fall to fall from 274K to 270K