Sterling briefly gained on strong industrial data
- Posted by Shyam Gokani in Bank of England, Brexit, Currency, David Cameron, Dollar, Economy, EUR, GBP, Mark Carney, Referendum, Sterling, UK
- June 8, 2016
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Sterling rose briefly to hit this morning’s high after data showed industrial output in Britain grew at its fastest pace in nearly four years in April, beating forecasts and wrong-footing investors who had positioned for a weak number.
It gave up those gains quickly as growing uncertainty about whether Britain will remain in the European Union, drove many to sell the pound at higher levels.
Industrial output rose 2.0 percent in April after a 0.3 percent rise in March, the biggest month-on-month increase since July 2012, the Office for National Statistics said. Economists polled by Reuters had expected it to stagnate on the month.
Manufacturing output also rose at its fastest pace since July 2012, up 2.3 percent on the month after a 0.1 percent increase in March.
The data was evidence again that such strong data is unable to leave its mark on sterling, the markets are being dictated by the political data in the lead up to the Referendum on June 23rd.
Betting website Betfair put the chances of a vote to leave at 28 percent, lower than Monday when it was at 30 percent.
Amid the uncertainty, the cost of protection against swings in the currency over the next month remained elevated and traded near its highest since late 2008. It was trading at just above 22 percent today, with demand for options betting on more losses in the pound at record levels.
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