The GBP/USD currency pair today dropped to new 3-week lows following the release of weak UK industrial production and trade balance data. The pair’s decline was further accelerated by a rebound in the US dollar demand supported by the sell-off across most European equities.
The GBP/USD currency pair lost over 190 points from a high of 1.3987 to drop to a low of 1.3790 in the mid-European session.
The currency pair was on an uptrend during the Asian session following the hawkish rate hold by the Bank of England. The pair’s decline was triggered by the release of weak UK industrial production data for December by the Office for National Statistics. Industrial production declined by 1.3% to register zero growth on an annualized basis. The country also recorded a trade deficit of £13.58 billion, which was higher than the expected £11.55 billion deficit, which also contributed to the pair’s decline. The upbeat manufacturing production and construction output could not reverse the pair’s downtrend.
The higher demand for the greenback as tracked by the US Dollar Index, which hit a high of 90.50 today, also contributed to the pair’s decline. Given the almost empty US economic docket, the greenback’s rebound was largely fueled by the sell-off in European equities.
Given the upcoming weekend, the currency pair’s future performance is likely to be affected by political events in both the UK and the USA.
The GBP/USD currency pair was trading at 1.3810 as at 14:52 GMT having dropped from a high of 1.3987. The GBP/JPY currency pair was trading at 150.45 having declined from a daily high of 152.76.
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