UK pound is a little higher today, gaining ground after yesterday’s drop following unexpectedly poor data. Even though sterling is seeing gains right now, the currency remains vulnerable. Long term weakness is likely.
Yesterday, data involving January’s industrial output in Britain showed a sharp drop that sent the UK pound tumbling against its major counterparts. The drop was precipitous, putting the sterling at a low not seen since the middle of 2012.
Right now, the UK pound is battling back to some degree, gaining ground against other major currencies. However, even with some of the improvement today, the sterling remains vulnerable in the long term.
The British economy continues to move at a sluggish pace. There isn’t much of a recovery going on, since all of the data seems to disappoint. When Mark Carney comes in during the summer to take over as Bank of England head, there is speculation that more quantitative easing will be seen. Carney is credited — at least in part — with helping to keep the Canadian economy afloat during and after the 2008 financial crisis.
At 12:33 GMT GBP/USD is moving higher, rising to 1.4942 from the open at 1.4898. EUR/GBP is down to 0.8683 from the open at 0.8745. GBP/JPY is also higher, moving up to 143.5585 from the open at 142.9950.
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