UK Fighting off Weakness

Market Trends - 11/05/2016

Industrial production in the United Kingdom rose in March from the previous month, but came in below expectations. The 0.30% as reported by the Office for National Statistics climbed from the previous month’s decline and upward revision of -0.20%. Commodity prices declining due to a waning in demand and overcapacity occurred in addition to the strength of the US dollar spurring shutdowns in the steel industry. The recent weakness of the sterling pound has raised demand for British products but as global demand is still at a slowdown, this continues to weigh on the economy’s exports.

According to the ONS, companies have put investment plans on hold until the referendum for the UK exiting the EU bloc. The referendum scheduled for June 23rd has led the British economy to a slowdown over the first quarter of the year as many economic indicators started reporting poor results. The polls over a Brexit recently appear to show that most people are in favor of Britain remaining in Europe but investor sentiment will not be satisfied up until the result, leading the pound towards weakness over most of its peers. The Bank of England convenes tomorrow to announce its monetary policy where it is expected that no changes will occur.

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