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The pound returns to decline today with mixed numbers for the British economy and a decline in bond yields

Today's market analysis on behalf of Samer Hasn Market Analyst and part of the Research Team at XS.com

 

January 12, 2024 (Investorideas.com Newswire) Pound sterling recorded some declines today against the US dollar (GBP/USD), reaching about 0.1%, reaching the level of 1.27472 at approximately 10:00 am GMT.

The pound's declines today came after mixed UK GDP data in addition to the return of a sharp decline in bond yields

Today we witnessed two estimates of gross domestic product (GDP) for last November, which varied across the different economic sectors.

On a monthly basis, GDP grew by 0.3% in November, which was higher than expectations of 0.2% and was also the fastest pace of growth since last June. On an annual basis, the gross domestic product recorded a growth of 0.2%, in line with expectations.

In sectors, services reversed the contraction seen in October to growth of 0.4% in November. However, it did not record growth in the three months ending in November. While the growth of information and communications technology outputs had the largest contribution to supporting services, with a growth of 1.5% on a monthly basis, in addition to a growth of 0.5% and 0.6% for wholesale and retail trade and professional services, respectively.

In industrial activity, outputs grew for the first time since last June by 0.3% on a monthly basis, which was in line with expectations. On an annual basis, it continued to decline slightly by 0.1%, which was below expectations for a growth of 0.7%. While the biggest boost came from the growth of oil and gas extraction activities by 2.2% and mining by 1.3% last November. We also witnessed a growth of 0.6% in the outputs of electricity generation, transmission and distribution activities.

Manufacturing activities recorded a reversal of the contraction trend in November and headed towards growth, higher than expected, for the first time since last June, by 0.4% on a monthly basis. But on an annual basis, it grew by 1.3%, which was below the expected 1.7%. This growth was supported by the pharmaceutical industries by 4.8% and foods, computer and electronics manufacturing by 2.1%.

As for construction outputs, they continued to decline for the second month in a row in November on a monthly basis by 0.2%. At the same time, it grew by 0.9% on an annual basis, which represents the slowest pace of growth since last May. While the greatest pressure came from a 2% decline in new business.

In other data, the trade balance deficit fell to its lowest level since last August, at 14.19 billion pounds.

Today's figures present a mixed picture about the British economy's ability to hold together in the face of negative surrounding factors, whether from a tightening monetary environment and upward risk of inflation or relatively weak demand in many sectors, most notably the housing sector.

In the bond market, the decline in British bond yields contributed to pushing the pound down today, coinciding with the rise in US Treasury bond yields. While the yield on ten-year British bonds reached 3.759%.

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