British Pound Tumbles Versus Dollar After A String of Downbeat Economic Data
Sterling dropped lower versus the U.S. dollar on Friday following downbeat U.K. data on manufacturing production. Meanwhile, the greenback held on gain ahead of a highly-expected U.S. Non-farm Payrolls which is due later in the day.
The currency pair GBPUSD lost more than 0.4 percent to trade at 1.2917 during European morning trade – its lowest level since Wednesday. The Pound pushed lower against most of its peers after the U.K. Office for National Statistics reported that manufacturing production retreated by 0.2% in May.
This was a disappointment compared to an increase of 0.2% recorded in the previous month and analysts’ forecast for a rise of 0.5 percent. On a yearly basis, manufacturing production advanced by 0.4%, well below expectation calling for an increase of 1.0%.
Besides, the ONS also reported data on U.K. industrial production which pointed to a down move of 0.1% in May. Economists had expected a 0.4% rise. Adding to the pressure on Sterling, construction output was reported to plunge by 1.2% while markets were expecting the figure to soar 0.6%.
Turning to the greenback, investors were nervously waiting for the Labor Department’s June nonfarm payrolls report. The report is forecast by analysts to show U.S. employers to have added 179,000 jobs last month. Ahead of Friday’s jobs data, the ADP National Employment Report released on Thursday showed private-sector payrolls increased by 158,000 jobs last month. The reading came in below both the 230,000 jobs created in May and economists’ expectations for a rise of 185,000.
Upbeat data will support the dollar to surge higher as they increase the optimism about the U.S. economy which would boost the case for higher interest rates at the second half of this year and in the following months.
On the contrary, a weak report would add to uncertainty over the economic outlook and prompt the Federal Reserve to delay the plans with regards to policy normalization to next year.
Sell Stop at 1.29100, Take profit at 1.28700, Stop loss at 1.29300