The UK sees another decline for manufacturing in five months

GBP

Sterling fell on Friday as concerns regarding the UK economy remained despite GDP data narrowly surpassing market expectations. Data released by the Office for National Statistics (ONS) showed UK GDP contracting by 0.6% in June, an improvement on the 1.3% contraction markets were forecasting. The year-on-year figure also slowed to 2.9%, down from 8.7% in Q1 but narrowly above expectations.

Industrial and manufacturing productions month-on-month figures were above market predictions, however, both numbers revealed a contraction with manufacturing reading -1.6% and industrial production reading -0.9%. Worryingly for Sterling this was the fourth decline in five months for the manufacturing sector.

Despite the above figures fractionally more positive than projections, the data failed to offer any significant surprises but rather a contraction of some kind.

In addition, investor confidence in the UK remains low. With growth already showing severe signs of deceleration, there is a reckoning that as the winter period approaches British households will face significant increases to their energy costs. This will further add to the cost of living squeeze consumers have already been facing in recent months, ultimately weighing on the economy as consumers opt to tighten their purse strings.

USD

The dollar rallied on Friday as the latest release of the Michigan Consumer Sentiment Index (Aug) showed sentiment in the US had improved in August to 55.1 from 51.5 in July, above expectations of 52.5.