Negative domestic data affect Pound

Negative domestic data affect Pound

10-08-2009 08:23

Pessimistic figures affected the Pound Sterling once again as it dropped against the Single Currency and Swiss Franc due to British manufacturing decreasing to the weakest level in more than ten years, increasing doubts about the economic prospects for the UK. Expectations that the global economy recovers faster than earlier was forecasted drove equities and commodities higher this Tuesday, thus boosting the Loonie, an informal term for the Canadian Dollar, to gain against the Greenback.

Negative domestic data

The Pound Sterling fell today mainly versus the Common European Currency as a report demonstrated disappointing data regarding manufacturing production in the UK, which dropped to the weakest level since 1992, resulting in concerns that the situation of the British economy remains alarming. The Sterling was gaining after a report indicated that house prices rose for a third straight month in September. However, the manufacturing data turned out pessimistic, frustrating the Pound’s rally and resulting in another negative trend.

Pound affected

Currency analysts believe that the Pound Sterling is being impacted by the credit crisis in the United Kingdom and its effects. The prior period of economic expansion in the UK was boosted by artificial loans, which came to an end when the credit mania ended in 2008. As from that moment, the UK central bank and the nation have been finding difficulties to restore the nation’s financial system and stabilize the economy.

Loonie up

The Reserve Bank of Australia favored the Canadian Dollar today by increasing its interest rate, indicating that the global economy recovers gradually, which was reflected by raising risk-taking in global currency markets, boosting the Canadian exports of raw materials and helping the Canada’s Dollar to gain.