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The Pound retreats on Weak UK Data

The Pound retreats on Weak UK Data

After having enjoyed a strong few days, the pound fell today against the US dollar after weak UK data was released.

It was a one-week low against the dollar, as figures showed that public finances have fallen again.  In December, it public sector borrowing was at record highs – meaning the UK is still in an upward struggle to regain strength.

The data was poorer than had been expected, and the market is still waiting for a clear, concrete plan on how the country will tackle the huge deficit.

Earlier in the week, the Bank of England’s Governor, Mervyn King, made a speech which many had hoped would give a clearer picture. 

Unfortunately, the market was not able to glean much from Mr King’s comments.  He remained broadly cautious and made no indication of an end to the current asset-buying programme.  The base interest rate also received little mention.

By midday, the pound had already sunk 0.9 per cent against the dollar at $1.6140.  Against the euro, it fell too – but remained close to the five-month highs it experienced on Wednesday.  The euro rose by a small 0.5 per cent reaching 87.06 pence.

Indeed, the pound is lucky that despite the weak UK data, it is able to stay relatively strong against the euro as the latter battles its own issues.  Greece lost some of its sovereign rating in December and is still experiencing a tough time fiscally.