Pound Sterling has already fallen zero.17 % to 1.1412 after opening at 1.1426. The British foreign money has suffered comparable deficit against the US dollar, falling zero.19 % to 1.2920 after opening at 1.2946. It’s more likely to be a significant day for the pound, with important information being launched this morning that may present markets with a steer on the steadiness of the economic system initially of the brand new yr.
The Office of National Statistics is releasing its first estimate of GDP, together with manufacturing and commerce information at 9.30am.
UK economic development is anticipated to have slowed on the finish of final yr, with markets anticipating a month-to-month GDP determine of zero % for December – down on the zero.2 % recorded in November.
GDP for the ultimate three months of final yr is anticipated to come back in at zero.three quarter on quarter whereas the annual GDP quantity can also be forecast to be zero.three %.
Concerns over the pound have mounted additional this morning after a brand new report revealed UK manufacturing output plummeted to a 150month low as the business anticipates a cliff-edge Brexit.
The report states enterprise confidence has sunk to its lowest degree since December 2016, whereas output within the providers sector stays under the long-term development development.
Business advisers BDO warned stockpiling by firms forward of the UK’s departure from the European Union is more likely to have masked a fair higher decline.
A separate enterprise survey additionally confirmed employment fell for the primary time in 4 years amid Brexit issues in Northern Ireland.
The Purchasing Managers Index (PMI) stated situations have been “subdued” initially of the yr, with decreased staffing ranges primarily as a result of job losses within the providers sector.
The survey of companies revealed enterprise exercise rose on the weakest tempo for greater than two years, whereas new orders solely elevated marginally.
Arne Anders Lohmann Rasmussen, chief analyst at Danske Bank, warned sentiment within the pound may erode except there’s a discount within the no deal Brexit dangers.
He stated in a current foreign money technique observe to shoppers: “We keep the view that it’ll require additional discount within the ‘no deal’ Brexit danger for EUR/GBP to check and ultimately break under zero.86.
“Appetite for GBP is likely to deteriorate as 26 February approaches without any signs of an agreement between the EU and UK.”
But Morgan Stanley strategist Hans Redeker is extra optimistic, and stated: “We emphasise our bearish EUR/GBP name despite the fact that the BOE has lowered its GDP projection in the direction of the bottom degree since 2009.”
This morning’s bleak figures come after the Bank of England sensationally warned the UK economy is not prepared for a no-deal Brexit after growth was downgraded to its lowest level since the financial crash.
Bank of England Governor Mark Carney pointed in the direction of uncertainties round Brexit inflicting “short-term volatility” and a “series of tensions” within the economic system and companies.
He stated: “The fog of Brexit is inflicting quick time period volatility within the economic information, and extra essentially, it’s making a collection of tensions within the economic system, tensions for enterprise.
“Although many firms are stepping up their contingency planning, the economic system as an entire remains to be not but ready for a no-deal, no transition exit.”
Mr Carney added: “Given the big selection of potential situations and the assorted paths to them, it could be outstanding if the present ranges of sterling and different uk monetary asset costs have been in step with the result that lastly emerges.
“Uncertainty round negotiations has clearly intensified since November and is now weighing extra closely on exercise, predominantly decrease enterprise funding and tighter monetary situations.”