The pound is sinking down


The British pound declined on Monday by 26 points due to the failure of industrial production data. The pound could lose even more, but the general market sluggishness before important meetings of the central banks and the politically optimistic background on the statements of Italian Treasury Secretary Giovanni Tria and the meetings of the leaders of the United States and North Korea weakened the aggressiveness of the "bears". So, industrial production in April shrank by 0.8% against the expectation of growth of 0.1%. Production in the manufacturing sector fell by 1.4% against a forecast of growth of 0.3%. The volume of production in the construction sector has grown, but only by 0.5%, while 2.4% is expected and the previous fall by 2.3%. The trade balance of the United Kingdom for April increased the negative balance from -12.0 billion pounds to -14.0 billion pounds.

Today data on labor will be published. The number of applications for unemployment benefits for May is expected to decrease from 31.2 thousand to 11.3 thousand, but the change in employment over the last 3 months (as a moving average) is expected at 124 thousand against 197 thousand in March. The average wage level, taking into account premiums, is expected to maintain a steady growth - the forecast for April was 2.5% after 2.6% in March. The unemployment rate (as of April) is expected to be unchanged at 4.2%. Nevertheless, the April indices of industrial production, most likely, will put pressure on the employment indicators. For the US, the growth of the CPI is expected - the May forecast is 0.2%.

We expect the pound to fall below the level of 1.3330, so as to raise the Fed rate to 1.3225/45 range and further to the range of 1.3135/65.


The material has been provided by InstaForex Company -