British Numbers Show Weakness
- GDP Q/Q and M/M released
- Manufacturing Production M/M released
- Industrial Production M/M also released
The UK released several economic figures during the trading session on Monday to kick off the week. Unfortunately, most of the figures have missed quite drastically.
The market has taken most of these announcements in its stride, but it may give a glimpse into why a couple of the members of the Monetary Policy Committee have suggested rate cuts out of London.
The numbers released
- Preliminary GDP Q/Q 3% versus 0.4% expected
- GDP M/M -0.1, as expected
- Manufacturing Production M/M -0.4 versus -0.2
- Industrial Production M/M -0.3%, versus -0.1%
Many of the numbers have missed, and with the specter of Brexit out there, this will spook people when it comes to the United Kingdom. There has been noise during the session about a possible hung parliament, and the British pound has rallied as a result. But this is a short-term fact, not something that can be sustained based on these figures.
The numbers suggest that Brexit is continuing to cause issues, but at the same time, there are a lot of problems in the European Union. It’s possible that part of what the numbers show is the knock-on effect from a weakening European Union, as the EU is still the biggest trade partner of the United Kingdom.
The market going forward will be looking at these figures even more closely, as although they were expected to be somewhat negative, the fact that they were worse than anticipated will scare a lot of traders.
Obviously, the Brexit situation will continue to outweigh anything else, but this list of bad news certainly doesn’t help going forward. As such, the market is very likely to continue to show a lot of weakness when it comes to risk appetite in the United Kingdom. But if Brexit is somehow solved, that will probably have traders looking through these numbers and at the possibility of a complete reversal.
During the session on Tuesday, the United Kingdom will release its Claimant Count figures, the Average Earnings Index, and the Unemployment Rate. These numbers will give traders a further look into the possibility of whether or not the market can expect even further weakness out of the United Kingdom.
Furthermore, the headlines coming out about Brexit will continue to throw the markets around back and forth. It appears that the “foundation” of UK economy is under serious stress. This will continue to cause a lot of negativity and concern when it comes to all things British, be it pounds, stocks, or even gilts, as people favor stability these days.