Private DCN Private DCN - Sterling

Inflation on the way, according to UK industrial data

By Michael Cooper December 19th, 2016

Once again Britain’s economy has defied expectations of a sharp slowdown following June’s now infamous referendum vote with the Confederation of British Industry reporting their strongest order books in nearly two years. This was better than expected but not a surprise given the bounce seen in manufacturing and the slump in Sterling. The report also suggested, however, that costs, and therefore inflation, will increase due the weak currency.

In the final week before the Christmas break the main focus will be on Friday when both current account data and final third quarter Gross Domestic Product (GDP) reading are due.

Other data points of note will be public sector borrowing as well as business confidence and retail numbers. As this is effectively the end of the month, we could see increased movement as market participants manage their currency exposures carefully.