Sterling dipped against the US Dollar and the Euro, when a series of data regarding trade balance and construction output in the UK came in weaker than expected. The report by the Office for National Statistics (ONS), showed that the UK’s industrial production grew for the eighth consecutive month in November, which is the longest run of growth in the last twenty-four years.

Chancellor Philip Hammond and Brexit Secretary David Davis will be in Germany today, in an effort to promote a deal, which “supports collaboration within the European banking sector, rather than forcing it to fragment.” The two politicians urged the EU to not put the hard-earned financial stability in Europe at risk, in an article for a German newspaper.

Pound Sterling – UK Markets

Today, the Pound kept losing ground against the US Dollar for a second day, with the exchange rate set at $1.34. Sterling also dropped against the Euro, with the exchange rate set at €1.13. The news was dominated by the release of data regarding UK trade, industrial production and construction output.

According to the Office for National Statistics (ONS), the UK’s industrial production increased by 0.4%, on a month-to-month basis in November, surpassing analysts’ expectations. On an annualised basis, industrial production rose by 2.5%, again much better than what economists had been expecting. Manufacturing output rose by 0.4%, beating expectations and the previous month’s reading.

Britain’s trade goods deficit with the rest of the world countries got bigger, reaching £12.2bn from £11.7bn in October. Ole Black, a senior statistician at the ONS, noted that “there was strong and widespread growth across manufacturing with notable increases from renewable energy projects, boats, planes and cars for export. Construction again contracted in the last three months, with private house building providing the only positive news in the sector.”

US Dollar – US Markets

The US Dollar dropped against the Euro with the exchange rate set at €0.83. The US Dollar Index (DXY), which measures the strength of the Dollar against six major competitor currencies, recorded losses coming in at 92.35.

Florida’s Republican Governor Rick Scott seems to have convinced Donald Trump’s administration to not allow oil drilling off the state’s coast. Five days ago, Ryan Zinke, who is the Interior Secretary, had announced the administration’s five-year oil drilling plan which would expand offshore drilling from the Atlantic to the Arctic ocean. The political pressure forced Zinke to say that there won’t be any drilling when it comes to waters in the eastern Gulf of Mexico and off Florida.

Minneapolis Fed President Neel Kashkari said yesterday that the US will have to deal with the rising fiscal deficit over the long term. The Fed’s board member noted that the slow pace of US economic recovery is due to psychological scarring from crisis and recession. Kashkari mentioned that he would be surprised if there was a sudden boost to productivity growth, adding that the bond market is telling Fed that the neutral rate is lower than in the past.

Euro – European Markets

The Euro gained ground against the US Dollar with the exchange rate set at $1.19. The absence of any significant economic data release today has made economists turn their attention to data regarding Eurozone’s industrial production due to be released tomorrow.

In France, industrial output declined by 0.5% in November, on a month-to-month basis according to data published by the INSEE. Economists had forecast the decline which came as no surprise. On an annualised basis, industrial production increased by 2.5%, slightly lower than the anticipated 2.6%. The French manufacturing production declined by 1.0%, on a monthly basis, which was a smaller decline than the 1.4% that analysts had been expecting.

Stefan Ingves, the Riksbank’s Governor, said that the Swedish central bank should be able to raise interest rates before the European Central Bank (ECB) does. The minutes from Riksbank’s December meeting revealed that rate rises could begin at a slow pace in mid-2018 and that inflationary pressures remain subdued which allows policy normalisation to proceed slowly.

Other Currencies – Highlights

Sterling lost ground against the Australian Dollar, trading under the $1.73 mark. Retail sales data is due to be released tomorrow by the Australian Bureau of Statistics (ABS) with most analysts expecting a 0.4% rise recorded in November. However, a Westpac report noted that subdued Christmas spending plans and risk aversion remaining elevated led to retail sales increasing by a modest 0.3% in November.

The Pound continued dropping against the New Zealand Dollar for a second day, trading at 1.88 NZD. Barfoot & Thompson announced that they sold only 674 properties in the area of Auckland in last December. This was the lowest number of sales in the last seven years. The report said that only 571 properties were listed, which was the lowest for any month since 2001.

Sterling fell against the Swiss Franc, trading at 1.32 CHF. Real retail sales fell by 0.2% in November, on an annualized basis according to data published by the Swiss Federal Statistical Office.