Pound Slides Below $1.24 as U.S. Jobless Rate Drop Buoys DollarBy and
U.K. production and construction output contracted in February
House prices also show signs of slowing growth in March
The pound slid on Friday after disappointment over U.K. economic data was followed by a drop in the U.S. unemployment rate that buoyed the dollar.
Sterling, which is set for its first weekly drop in a month, initially fell as figures showed that February manufacturing, construction and industrial production were all below the median forecast of economists surveyed by Bloomberg. The pound extended its decline and was the worst-performing Group-of-10 currency against the dollar after U.S. labor data showed that the jobless rate unexpectedly dropped last month to its lowest in almost a decade.
- GBP/USD falls 0.6% to $1.2397
- Stops below 1.2400 were triggered, with more seen below 1.2377, the March 29 low, a Europe-based trader says
- Analysts surveyed by Bloomberg expect a slight decline to $1.23 by the end of the year
- The U.K. factory reports added to a trend this week indicating that, with the exception of the country’s dominant services sector, the nation’s data is disappointing economists
- Citigroup Inc.’s economic surprise index, which measures whether economic data have exceeded or fallen short of analysts’ estimates, fell to the lowest level this year earlier this week
- In other data published Friday, U.K. three-month house prices rose 3.8% on the year, less than the 4% expected by economists
- “The sharp fall in house price growth will weigh more heavily on consumer confidence soon,” says Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, in a note to clients
- While PMIs for the service sector released Wednesday saw better-than-expected growth, manufacturing and construction PMIs this week fell short of economist forecasts
- The pound stayed lower after Bank of England Governor Mark Carney urged banks to get contingency plans in place for all potential Brexit outcomes
- Yield on 10-year gilts falls 3bps to 1.07%
— With assistance by Vassilis Karamanis