Proactive Investors - The pound looks set for a mixed trading session to kick off the new week in response to a string of soft economic readings.
Industrial output fell by 2.4% in October, while GDP rose only 0.5% month on month/1.5% year on year.
Although this was a rebound from the previous reading of -0.6%, the three-month average was still in the red at -0.4%.
More signs of tightening financial conditions could be on the way, depending on tomorrow’s unemployment data and wage inflation, combined with Wednesday’s inflation reading, all of which will influence the Monetary Policy Committee’s interest rate decision on Thursday.
Hawks would prefer to see a 50 bps hike to 3.5%, though with GDP expected to fall in the coming months, a softer 25 bps isn’t off the table.
Cable finished the Sunday session 20 pips lower at 1.223, and is currently changing hands slightly higher at 1.224 in this morning’s Asia window.
GBP/USD set for mixed session as traders wrangle with slew of economic results – Source: capital.com
EUR/GBP added 0.12% yesterday and continued to add pips this morning, though at 86.03p, is still below the 20-day moving average due to Sterling’s bumper end to last week.
The euro area also has an interest rate decision later this week, with 50 bps as the running assumption.
EUR/USD has been fairly subdued in anticipation, having generally stuck close to the 1.05 mark for the past nine sessions. The pair was changing hands at 1.052 as of 8am.
Despite minor gains in the past two sessions, the US Dollar Index (DXY) continues to beat a downward path in the wider context, and currently stands at 104.71.
Read more on Proactive Investors UK
