A tough day for sterling saw it lose ground across the board, hitting one-month low against the US dollar as investors sought the safety of the US dollar in light of further turmoil in the euro area.
Although market attention is doubtless focused upon the Eurozone this week, confirmation of a second straight month of contraction in UK manufacturing production is a worrying sign for the UK industry. With a 0.1% increase forecast, a decline of 0.6% throughout June suggests that UK manufacturing could struggle throughout the rest of the year given sterling’s strength hurting exports and the UK’s main market, Europe, facing disruption. Following the release of this data, sterling fell across the board.
A significant day for sterling sees the annual budget released at 12:30pm. With the Conservative government sweeping to power at the general election, investors will be keen to see confirmation of their plans to steer the UK economy towards strong growth and financial stability throughout the coming years.