British Pound Stays Pressured by Weak Manufacturing Report
The British pound fell after weak data on industrial production in Great Britain. Report from the Office for National Statistics (ONS) showed that industrial production fell by 0.8% mom 1.8% yoy in April, versus expectation of 0.1% mom 2.7% yoy. Manufacturing production declined by 1.4% mom 1.4% yoy, versus expectation of 0.3% mom 2.9% yoy, and prior -0.1% mom 2.9% yoy. Construction output rose 0.5% mom in April versus expectation of 2.4% mom and prior -2.3% mom. Visible trade deficit widened to GBP -14.0B in April, from GBP -12.0B, missed expectation of GBP -11.5B, versus expectation of 2.4% mom and prior -2.3% mom.NIESR said UK GDP is estimated to have grown 0.2% in the three months ending May, following 0.1% grow in the three months ending April.
The euro rose earlier against the US dollar above the psychological mark of $1.1800 against the backdrop of positive statements by the Italian finance minister that the country does not intend to leave the EU. This week, focus of the markets will be on ECB meeting on Thursday. Investors are raising their bets that the ECB will signal on Thursday a winding down of its vast bond-buying program by the end of 2018, following a hawkish comments by officials last week.
The US dollar is trading mixed in anticipation of the FOMC meeting. The US Federal Reserve is almost unanimously expected to raise interest rates for the second time this year on Wednesday. The market's focus will be on the Fed's projection on the path of future interest rates.
The Bank of Japan is also to meet later this week and is expected to keep monetary policy on hold at the conclusion of its meeting on Friday. Traders shrugged off geopolitical risks in the wake of the contentious G7 meeting in Canada over the weekend. US President Donald Trump refused to endorse the final communique. Investors expect a historic summit meeting between US President Donald Trump and his North Korean counterpart Kim Jong-un in Singapore on Tuesday.