The British pound declined on Wednesday, as traders felt more anxious about the future road of Brexit. Recent comments from UK Prime Minister Theresa May increased fears of a hard Brexit and overshadowed strong economic data.
The UK Office for National Statistics released its production data for November 2016 today, which showed an increase by 2.1% in industrial output when compared to October 2016. The fresh data exceeded expectations of an increase by 0.8%. Industrial output declined by 1.1% last October.
The higher output in November stemmed from an increase in mining and quarrying production. Manufacturing activity also rose by 1.3% in November, however the biggest gain was for pharmaceuticals, which had 11.4% higher production. Total production gain in November 2016 was 2% higher than the same month a year earlier.
The positive data failed to provoke strong gains for the pound, which initially rose before heading south as traders remained concerned about Theresa May’s comment last Monday. The prime minister told Sky News that the UK should not hold bits of its European Union membership after leaving the union. Her comment raised expectations of a hard Brexit; a scenario in which the UK would give up full access to the EU and its single market for full control over its borders.
The pound further weakened as another report released by the Office for National Statistics today showed that the UK’s deficit on trade in goods and services widened in November 2016. Imports rose by 3.3 billion pounds, while exports gained 0.7 billion pounds, which placed the trade deficit at 4.2 billion pounds, from 2.6 billion pounds in October.
GBP/USD traded at 1.2237 as of 19:05 GMT on Wednesday, after touching 1.2050 at 15:25 GMT, the pair’s lowest level since October 11. GBP/USD started trading today at 1.2186.
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