| More bad data for Pound Sterling |
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| Written by Mark Deans at MoneyCorp | |
| Thursday, 11 March 2010 09:18 | |
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But some support came, from of all place, 10 Downing Street. The pound sterling got off to an uncomfortable start on Wednesday with a rotten set of data for industrial and manufacturing production. Falling by -0.4% and -0.9% respectively in January the figures were negative when they should have been positive. Although year-on-year performance improved to -1.5% and +0.2% there was no way of showing the results in a good light. It meant a half-cent hit for sterling and another round of head-scratching as investors wondered whether the British economy really is back into growth mode. Pound sterling's most useful support yesterday came from, of all places, Downing Street. The prime minister's announcement of a pay freeze for senior public sector employees and his reassurance that Britain will not lose her AAA credit rating was comforting to investors on more than one level. The pay freeze showed them that Mr Brown is, after all, capable of making unpopular decisions (although by hitting high-earning civil servants he is not exactly antagonising his core voters). The prime minister's comment about Britain's credit rating, whilst obviously not binding, suggested that he does actually care about it when some thought he did not. That support was enough to allow sterling to edge higher on the day against everything except the euro and the Swiss franc. Against those it starts this morning half a cent down from yesterday's opening levels. Buoyant stock markets and a fading yen gave the impression of heightened risk-appetite among investors but it did not carry through to the commodity currencies. They lost ground during the day and fell further overnight. For the Australian Dollar the specific obstacle was a weaker than expected employment report showing just 400 new jobs in February. For the New Zealand Dollar it was the Reserve Bank of New Zealand's monetary policy statement, which repeated the promise (threat?) of higher interest rates in the middle of the year. It was not bad news but investors had heard it all before, several times. Another central bank decision comes at lunchtime when the Swiss National Bank does its stuff. Expect another reminder that the franc is too strong and no change to the policy rate. As for the economic data, Canada puts out its figures for capacity utilisation (how busy manufacturers were in the fourth quarter) and January's trade balance and new housing price index. The United States also reveals January's trade figures as well as weekly jobless claims. There are no European data at all. 
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| Last Updated ( Thursday, 11 March 2010 09:24 ) |