Pound Sterling drops further as market sentiment deteriorates, mix UK factory data

Pound Sterling experiences a sell-off after mixed UK factory data. The UK economy is expected to report a technical recession despite 0.3% growth in November GDP. Investors await the UK labor market and inflation data for further action. The Pound Sterling (GBP) struggles to sustain against the US Dollar amid deepening tensions in Middle East region, which have dampened market sentiment . US military and its allies have launched airstrikes on Houti rebels as they were warned for attacking merchant vessels flowing from Red Sea. This has escalated fears of oil supply disruptions and entry of Iran between Israel-Hamas war. While soft United States Producer Price Index (PPI) numbers for December are also impacting the US Dollar’s appeal. The monthly headline PPI contracted for the second month in a row by 0.1% against expectations of 0.1% growth and annual PPI rose moderately by 1.0% against 0.8% growth in November. Market participants forecasted the econmic data expanding by higher pace of 1.3%. Producers of core good and services kept prices unchanged at factory gates for second straight month while investors projected them to rose by 0.2%. The annual core PPI softened sharply to 1.8% versus, the estimates of 1.9% and the former reading of 2.0%. In early Europe, the GBP/USD pair faced a sharp correction as the United Kingdom Office for National Statistics (ONS) reported mixed factory data for November. Monthly growth in the manufacturing sector was slightly higher while annual data failed to match expectations. Overall economic data was slightly better than expectations but seems incapable of taming fears of a technical recession happening in the UK economy. Going forward, the Pound Sterling will be guided by the labor market and inflation data, which are due to be released next week. Cooling labor market conditions and a further decline […]

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By Donato