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The Pound Sterling is Tanking as Industrial Production Numbers Show a Huge Mess for Their Economy

“The pound dropped to the lowest against the dollar in more than 2 1/2 years and government bonds advanced as a report showed U.K. industrial production unexpectedly declined in January.

Sterling weakened for a second day versus the euro after data showed output fell 1.2 percent from December, according to the Office for National Statistics. The median forecast in a Bloomberg News survey of 29 economists was for a 0.1 percent increase. Manufacturing also unexpectedly contracted, slipping 1.5 percent in January. Gilts gained after the Royal Institution of Chartered Surveyors said house prices decreased for a second month in February.

“Momentum is clearly against the pound and, if anything, that serves as an excuse to carry on the market takes it,” said Derek Halpenny, European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ in London. “The weak data backup renewed quantitative easing and it’s a clear recipe for further pound weakness.”

The pound fell 0.4 percent to $1.4861 at 11:01 a.m. London time after sliding to $1.4832, the lowest level since June 2010. Sterling weakened 0.1 percent to 87.53 pence per euro.

Bank of Tokyo-Mitsubishi forecasts the pound will slide toward $1.40 within 12 months. It could “easily” reach that level within in a couple of months, Halpenny said.

The benchmark 10-year gilt yield decreased six basis points, or 0.06 percentage point, to 1.96 percent. The 1.75 percent bond due in September 2022 rose 0.5, or 5 pounds per 1,000-pound face amount, to 98.215….”

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