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Forex News: Pound Falls As U.K. Trade Deficit Widens, Industrial

Pound Falls As U.K. Trade Deficit Widens, Industrial Output Drops

06/11/2018 - 05:36:00 (RTTNews)

(RTTNews) - The pound weakened against its major counterparts in early European deals on Monday, as U.K. industrial production plunged unexpectedly in April and trade deficit widened to the most since September 2016.

Figures from the Office for National Statistics showed that U.K. industrial production decreased unexpectedly at the start of the second quarter.

Industrial production fell 0.8 percent month-over-month in April, reversing a 0.1 percent rise in March. It was the first decline in four months.

Meanwhile, economists had expected a stable 0.1 percent increase for the month.

On a yearly basis, industrial production growth eased to 1.8 percent in April from 2.9 percent a month ago. The expected growth rate was 2.7 percent.

Manufacturing production dropped 1.4 percent monthly in April, following a 0.1 percent contraction in March. In contrast, output was expected to recover by 0.3 percent.

Moreover, this was the largest fall since October 2012, when it slid by 1.8 percent.

Data from the Office for National Statistics showed that the United Kingdom's visible trade deficit in April was the biggest in over one-and-a-half years.

The trade in goods deficit widened to GBP 14.035 billion from GBP 9.248 billion a year ago and GBP 12.003 billion in March.

Economists had forecast a shortfall of GBP 11.4 billion.

Meanwhile, investors awaited a historic summit between U.S. President Donald Trump and North Korean leader Kim Jong-un on Tuesday and key central bank meetings later this week.

The Fed is widely expected to raise interest rates by 25 basis points when it concludes its two-day meeting on Wednesday.

Although the ECB is expected to leave policy unchanged, it is likely to signal plans to start unwinding its stimulus programme.

The pound showed mixed trading against its major counterparts in the Asian session. While it rose against the greenback, the yen and the franc, it dropped against the euro.

The pound declined to 1.3366 against the greenback, after rising to a 4-day high of 1.3441 at 3:25 am ET. Next key support for the pound is likely seen around the 1.33 level.

Following a 5-day high of 1.3257 hit at 2:30 am ET, the pound retreated to 1.3175 against the Swiss franc. If the pound continues its fall, 1.30 is possibly seen as its next support level.

The pound weakened to a 4-day low of 0.8826 against the euro, compared to 0.8771 hit late New York Friday. The pound is seen finding support around the 0.90 region.

Pulling away from an early 4-day high of 147.84 against the yen, the pound eased back to 146.93. The next possible support for the pound is seen around the 145.00 level.

Data from the Bank of Japan showed that Japan M2 money stock rose 3.2 percent on year in May, coming in at 1,003.2 trillion yen. That was unchanged from the April reading following a downward revision from 3.3 percent.

The M3 money stock was up 2.7 percent on year to 1,331.3 trillion yen - again unchanged from the previous month following a downward revision from 2.8 percent.

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