UK data losing its shine – GBP vulnerable to further downside
UK industrial and manufacturing production data disappointed expectations this morning by falling 1.1% and 1.2% m/mrespectively. Consensus expectations were for a 0.4% m/m gain from both measures of production. We expect that GBP candecline further, especially against the USD once a US fiscal resolution is found. In our current recommendations we target adecline to 1.5300. The positive data surprises from the UK economy have supported the GBP, but our Positioning Analysisindicates that long GBP positions are vulnerable to unwinding. Further downside surprises from next week’s CPI andemployment data have scope to drive a further decline in the GBP.
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BNP Paribas