UK Pound Drops as Economic Data Disappoints

UK pound is heading lower today, thanks in large part to disappointing economic data. Analysts and others have had high hopes for the United Kingdom, and the disappointing economic news has many selling the pound.

A few weeks ago, there were rather high hopes for the pound. Economic data in the United Kingdom was improving, and it appeared that things were picking up and that the Bank of England would be able to starting reducing its easing program.
However, the latest economic data isn’t so encouraging. The last factory output report, for November, showed disappointing stagnation. Additionally, the UK economic surprise index from Citigroup showed a slide at the end of last week. The UK economy that looked so promising a few weeks ago is now disappointing analysts and traders, and demand for the pound is dropping.
Sterling could gain some ground moving forward, depending on what economic data comes out in the future. The Bank of England is still a ways away from changing its policies; at the last meeting everything was left in place. But for now, there’s a lot of disappointment.
At 14:04 GMT GBP/USD is down to 1.6372 from the open at 1.6487. EUR/GBP is up to 0.8335 from the open at 0.8296. GBP/JPY is down to 168.9910 from the open at 171.4350.

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