The industrial data was significantly weaker than expected with a 0.6% decline in industrial output for May following a revised 0.2% increase the previous month with manufacturing output also declining.
The NIESR reported a 0.4% GDP decline in the three months to May following a revised 1.3% decline the previous month. The institute reversed its view that the economy had bottomed in April and stated that conditions were now broadly stagnant.
The data overall will tend to be a negative factor for Sterling as it will raise further doubts over recovery prospects which will also tend to reinforce the serious underlying government debt fears.
The UK currency was unsettled by fresh declines on global stock markets and retreated to lows around 1.6120 against the dollar while there was a renewed test of support beyond 0.8620 against the Euro. Speculation over further Bank of England quantitative measures at Thursday’s meeting will tend to unsettle the currency over the next 24 hours.
By: Darrell Jobman
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