GBP: mixed day for UK economic data sees sterling hold relatively steady

The day began in a disappointing fashion after figures released showed that the UK deficit widened to £8 billion in October. Given that Chancellor Hammond is delivering his budget later today, it is not ideal news, as it makes increasing spending a little trickier than it might otherwise have been.

However, the day got better with the news that UK factories reported their biggest increase in new orders since 1988. This was largely attributed to the weaker pound brought about by the Brexit vote. 28% of manufacturers said order books were above normal, with 11% reporting they were below normal. The net balance of +17% is the highest figure since August 1988.

As a result of the day’s events, moved sideways against the US dollar and euro. While the City was clearly disappointed with the budget deficit news, it could have been a worse day for the pound.

The chart below shows sterling’s performance against the euro over the past month. The pound has been moving sideways for some time now and one wonders when it will make a move in either direction. When it does – and it surely will – the movement is likely to be significant.