Daily Economic Commentary: United Kingdom

Trading Discussion News and Economy
125

It looked like the GBP was going to suffer through another day of torture against the USD and JPY before it got propped up late in the European session. The pound fought back, limiting its losses for the day. Cable closed at 1.6270, which wasn’t so bad considering it went as low as 1.6168.

The pound fell in the early going yesterday on recent fears concerning credit downgrades in Europe. Considering the UK’s fundamental outlook, its no surprise that the pound hasn’t been showing any punch as of late. If other European nations are getting downgraded, then the UK and its rising debt would surely suffer the same fate.

Speaking of debt… Chancellor of the Exchequer Alistair Darling announced that he would be implementing a 50% tax on bank bonuses, while also confirming that the value added tax rate would be readjusted to 17.5% following the elections next year. These moves are all part of his plan to cut the government’s debt in half. However, this wasn’t enough to stir up sustained optimism about the UK situation, leaving many to believe that Darling will not reach his goal of halving the UK’s deficit. If the situation continues to worsen,we could see the UK’s credit rating downgraded. If that happens, I doubt we’ll see see Darling in office by this time next year… Hah!

The country’s trade balance also came in yesterday, which printed some disappointing figures. The deficit grew to £7.1 billion, up from September’s revised figure of £6.9 billion deficit. Seeing as how the deficit has been slightly growing the past couple of months, when will we hear catcalls for a weaker pound from the Bank of England?

Ah the Bank of England… the spotlight will be on them today, as they wioll release their interest rate decision today at around 12:00 pm GMT. It is expected that the BOE Monetary Policy Committee would not be making any changes to the base rate, nor would they expand quantitative easing measures. Still, stay on your toes and be ready for any surprise comments made by BOE officials – you never know what could rock the markets!

126

The GBP stayed resilient against its counterparts, USD and JPY, as BOE officials agreed to stick with its 200 billion GBP asset purchase program. Many speculated that the central bank would expand its easing program but the BOE monetary policy committee deemed the current level of purchases appropriate. Whew!

The BOE also kept their benchmark rate unchanged at 0.5% as expected. Any changes in their easing programs will probably be implemented in February. According to Chancellor Alistair Darling, the British economy is projected to expand by 1.5% next year. He also announced that taxes on income will be raised in order to fund government spending.

Today, UK will release its PPI data by 9:30 am GMT. Producer input prices are expected to rise by 0.6% in November after climbing by 2.6% in October. Producer output prices are projected to increase by 0.4% in November following a 0.2% uptick in October.

Watch out for the release of US retail sales data at 1:30 pm GMT since the report could spark volatility in the markets. Retail sales could print an estimated 0.6% rise in November while core retail sales might post a 0.5% increase.

127

The pound was mixed in last Friday’s trading as it closed positive against the yen while losing versus the dollar. Prices can swing either way this week with the release of several top tier economic reports in the UK.

Later at 12:01 pm GMT, UK’s RICS house price balance will be release. The balance is expected to log in a score of 39% from 34%. However, with the recent 2.2% drop in the Rightmove HPI, a less-than-expected result could also show up.

Tomorrow (December 15), UK’s annualized CPI for the month of November will be due. UK’s inflation reading is projected to increase to 1.8% from 1.5%. A rise in the CPI indicates that demand for goods and services are getting higher. Such of course should reflect well on the economy and the currency.

On December 16, UK’s claimant count rate will also be reported. The number of people claiming unemployment benefits in November is seen to rise to 14,200 from 12,900. Notice that UK’s claimant count change is way better than that of the US. Remember that US’s initial jobless claims total about 400,000 plus on a weekly basis. In any case, an increase in the UK’s figure could be bearish for the GBP.

On December 17, UK’s retail sales for the month of November will likewise be published. Sales during the month are seen to have increase again by 0.5% from the previous period’s 0.4% gain. Data on retail sales can be used as a leading indicator of UK’s overall consumption figure which makes up about 76% of the total GDP. Hence, any advance in the account could be bullish for the economy and the GBP. Later in the day, UK’s CBI realized sales, which is seen to reach a mark of 16 from 13, will also be reported. It is likely to achieve the consensus given any increase in the actual retail sales figure.

128

Despite some up and down movement, the Cable pretty much remained inside its trading range yesterday. It closed the US session at 1.6307, just 60 higher pips from its Asian opening price.

The slight rise in the Cable value was caused by the news that Abu Dhabi would provide $10 billion in support for Dubai’s debt problem.

However, data released didn’t share the same “optimistic” tone. For one, the Rightmove house price index showed that house prices fell 2.2% this month. This marked the second month of decline, as prices already dropped 1.6% in November.

A survey by another agency confirmed the weak housing market. The RICS house price balance just released printed 35%. Although higher than zero percent (meaning more surveyors reported an increase in house prices), the actual result was worse than the 39% forecast.

Later on today, we’ll be UK’s consumer price index at 9:30 am GMT. The consumer price index, which is the BOE’s primary gauge of UK’s inflation, measures the monthly percentage change in the price of goods and services bought by consumers. The forecast is a reading of 1.8%, slightly higher than the 1.5% increase seen the month before. However, the core version of the report, which removes the prices of food, energy and other volatile items, is expected to show the same 1.8% increase seen the month before.

If these economic reports come in higher than expected, we might see the Cable retest resistance around the 1.6330-1.6340 region. In the event that this price region holds, the Cable could be in for a sharp dive…

129

Looks like traders are indecisive about the pound, as the GBPUSD pair stayed within range for the 5th day in a row. The pair ultimately closed slightly lower at 1.6275.

The pound’s losses could have been worse, but it found some support from the consumer price index that showed annualized growth of 1.9%. This was a nice improvement from the previous month’s figure of 1.5%, and is very close to the 2.0% target of the Bank of England. Furthermore, with inflation nearing the target, it may reduce the probability that BOE officials will push for further quantitative easing measures.

We could see more movement in cable trading today, as employment data will be available at 9:30 am GMT. The claimant count change report is predicted to show that 13,900 people filed for unemployment benefits last November, slightly more than October’s number. At the same time, the unemployment rate is expected to have increase slightly from 7.8% to 7.9%.

Looking ahead, we’ve got retail sales figures and the CBI realized sales report coming out tomorrow. Retail sales are expected to have grown by 0.5% from October to November. While the CBI index - a measure of sales volume - is expected to improve to have a score of 16, up from November’s reading of 13. Scores above 0 indicate increased sales volume.

With the high impact reports coming out over the next couple of days as well as the FOMC statement coming out tonight, could we see a break of the recent consolidation?

130

Unlike its peers, the pound refused to give way to US dollar strength. The cable surged to a high of 1.6411 as the UK reported a surprise improvement in its labor market. Traders banked on these strong employment numbers, thinking that the BOE’s efforts are finally starting to pay off.

UK jobless claims fell for the first time since February 2008, printing a 6.3K decrease in claimant count change for November. This was unexpected, considering the consensus was a 13.9K increase in jobless claims for the month. Aside from that, average hourly earnings rose by 1.5%, which is stronger than the estimated 1.3% increase.

Despite these upbeat employment reports, Chancellor Alistair Darling maintained that unemployment would continue to climb next year. Digging a little deeper into the jobs figures would show that the improvement in hiring was mostly a result of the increased hiring of part-time workers for the holidays. Santa needs his elves during this time of the year, doesn’t he?

Speaking of gift-giving, retail sales probably rose in November as consumers started their holiday shopping. The retail sales report, which is due 9:30 am GMT today, could show that sales climbed by 0.5% in November. The CBI realized sales report, due 11:00 am GMT, could step up from 13 to 14.

Also due today is the consumer inflation expectations report. Results of the August survey showed that consumers expected inflation to reach 2.4% for the third quarter. This time around, consumers will give their inflation expectations for the fourth quarter. Watch out for that report at 9:30 am GMT.

131

The pound took a beating from the greenback and the yen yesterday due to a surprisingly weak November retail sales in the UK plus a slump in the US capitals markets. The cable fell to as low as 1.6080 before closing at 1.6162. Similarly, the guppy (GBPJPY) also slid to a low of 144.68 before closing at 145.39.

Sales at the retail level unexpectedly dropped by 0.3% in November. Non-food sales led the drop with a 0.9% decline. Consumers remain hesitant to spend even ahead of Christmas due to a weakness in UK’s labor market. UK has lost more than 600,000 jobs since the start of the global financial mess. The country’s unemployment rate currently stands at a high of 7.9%. Predictably, UK’s CBI realized sales stayed flat at 13.

Today (9:30 am GMT), data on UK’s public sector net borrowing for the month of November will be published. The British government’s public borrowing could rise to £23.1 billion on top of the previous month’s £11.4 billion. While an increase in government spending could effectively translate positively to the country’s GDP, funding it through public borrowing could weigh on the pound.

132

The GBPUSD attempted to retrace some of its losses early during the Asian session last Friday but failed to follow through with the move and dropped 150 pips when it hit 1.6250, a major resistance level. The increasing strength of the US economy and persistent debt worries put downward pressure on the GBPUSD’s price action as well.

UK’s public sector net borrowing for November released on Friday came in at £20.3 billion, not far from the £23.1 billion initially forecasted. Borrowing on October was revised to £10.2 billion, down from £11.4 billion. Like I said in my previous post, while an increase in government spending could effectively translate positively to the country’s GDP, funding it through public borrowing could weigh on the GBP.

Before we head into the holidays, we’ve got two high-profile economic reports this week.

First up, on Tuesday, expect to see UK’s current account for the third quarter of this year. The current account basically measures the net difference in value of international capital, goods and services in and out of the country. A rising current account is usually seen as bullish for the domestic currency, in this case, the GBP, as it indicates that the rest of the world is investing money in the country. UK’s current account is predicted to print -£8.1 billion, down from the second quarter’s -£11.4 billion balance.

The second one, the MPC meeting minutes, will be released on Wednesday. The MPC meeting minutes details the reasoning behind the MPC members’ way of voting. The minutes create quite an impact on the forex markets because currency traders use it to make out how the bank sees the economy. An upbeat and hawkish report could provide some support for the falling GBP.

133

Despite the lack of any key economic reports, the pound got swept away as traders kept up their USD buying. Cable fell over 60 pips to close at 1.6050.

Today will be busier, as trade (via the current account) and GDP data will be available at 9:30 am GMT. Recent trade data showed a slight uptick in trade, which probably explains why projections are for the deficit to shrink from ₤11.4 billion to ₤8.1 billion . At the same time, GDP figures for the third quarter are expected to be revised up from a 0.3% decline to 0.1%.

I’m somewhat skeptical whether we will see an improvement in GDP data. Poor retail sales and industrial production figures aren’t act towards an upward revision in the data. Still, with this being the third release of the report, it may not have much of an impact on the market whether or not it comes out better than expected.

I suspect that we’ll see much move movement on Wednesday, as the minutes of the latest MPC meeting will be released at 9:30 am GMT. I’m interested in seeing whether or not any MPC officials actually called out for more quantitative easing. If the minutes reveal that some officials want to add to the asset purchase facility, it may provide more food for GBP bears to pounce on.

134

Argh! So much for hoping for a positive GDP reading. The pound was immensely disappointed when it learned that the British economy was still stuck in recession, despite the upward revision on their third quarter GDP. The cable easily gave way to greenback strength while the guppy struggled to hold on to its recent gains.

The cable broke below the 1.6000 handle yesterday when the final GDP report confirmed that UK’s economy contracted during the third quarter of the year. The final GDP reading was actually revised from the previously reported -0.3% to -0.2%, suggesting that the BOE would hold on to their easing policies until the British economy finally posts positive growth. Being the only major economy left wallowing in recession must be bloody hell for them…

UK’s current account balance, which was also released yesterday, was another blow for the pound. The report showed that their deficit widened from 4.4 billion GBP to 4.7 billion GBP in the third quarter. Ouch! Although the actual figure came in better than the estimated 8.1 billion GBP deficit, it seems the pound wasn’t too pleased with the news. What else could go wrong for the British economy?

Debt standing warnings from credit rating agencies, that’s what! Fitch and Tullet Prebon pointed out that the UK’s budget deficit is officially the worst and deepest slump since World War II. Yikes! According to them, this credit deterioration leads to a crisis of confidence in the British economy, discouraging further economic activity. So, would that mean the UK would stay buried in the recession for the next quarter? Oh no!

Today, let’s hear what the BOE has to say about the current state of UK’s economy. Minutes from the latest BOE monetary policy meeting are due 9:30 am GMT. Also due today is the BBA mortgage approvals report, which could show that mortgage approvals rose from 42.2K to 43.3K in November. Aside from these, no other reports are due until the end of the week.

135

It was not a merry Christmas for the pound bulls last week as they just got slaughtered by the greenback. The pound fell to a new 10-week low versus the dollar at 1.5921 before closing slightly higher at 1.5947.

In the most recent MPC meeting minutes, the BOE unanimously voted to keep their bond purchasing facility the same at £200 billion while also maintaining the central bank’s interest rate at a record low of 0.5%. According to the bank, the developments during this month are still insufficient to change their outlook on the economy regarding growth and inflation.

Meanwhile, the BBA mortgage approvals surprisingly reach 44,700 with mortgage lending rising to £3.3 billion in November. Trading of the pound was erratic around the time of the reports’ release. Though, the pound bears still managed to take control afterward to close last week’s trading.

The only notable economic issue in the UK this week would be the release of the country’s Nationwide HPI. House prices with mortgages backed by Nationwide are seen to increase again by 0.4% in December following a 0.5% gain during the previous month. However, according to a research produced for The Sunday Telegraph by Lombard Street Research (LSR), the increase in house prices is outpacing the rise in the household’s disposable income. Buying houses will become harder and harder if such is the case. This, of course, will negatively impact sales over the medium to long term.

136

The last week of 2009 proved to be a good one for the Cable as it was able to close out at 1.6165, around a hundred pips from its week opening price. However, looking at the charts would reveal that the Cable’s trend is still downwards, as it has been consistently been making lower lows since the second week of November.

It seems that traders taking profit off their dollar longs and the strong Nationwide HPI reading helped the Cable regain some of its losses. The Nationwide HPI came in just as expected, showing an increase of 0.4% in house prices for the month of December. The report was good news for UK’s economy, as it meant that house prices rose 5.9% during the year, a huge improvement from the 15.9% drop seen the year before.

The Cable will start off 2010 busy as UK’s economic cupboard is packed with high-profile news!

Today, at 9:30 am GMT, UK’s manufacturing PMI and Net Lending to Individuals are due. The manufacturing PMI is expected to print a reading of 52.1 for December, a slight uptick from the 51.8 reading the month prior. A rising manufacturing PMI is usually seen as bullish for Cable because it means manufacturers believe that the industry is growing.

On the other hand, the report on Net Lending to Individuals is predicted to show that lending increased to £600 million in November from £300 million in October. What does this mean? Well, the more people borrow, the more they spend… and since consumer spending makes a huge chunk of UK’s economic activity, traders consider an increase in lending to individuals as good for the economy and the domestic currency.

On Wednesday, at 9:30 am GMT, UK’s services PMI will be released. This report is just like the manufacturing PMI except that the respondents come from the services industry. The expectation is a reading of 56.8 for December, slightly higher than the 56.6 reading seen in November.

While all this is going on, Halifax’s version of the house price index could be released anytime this week! The forecast on the Halifax HPI is that house prices climbed 0.6% in December, lower than the 1.4% increase seen the month before.

Then, on Thursday, the BOE joins the fun as they announce their decision on the country’s benchmark interest rates. The BOE has already cut rates to ultra-low levels at 0.50% and no change is expected again this time around. No expansion in the bank’s quantitative easing program is expected too.

137

Despite the release of good economic data, the pound took a hit in yesterday’s trading session as it was the only major to fall against the USD. After hitting an intraday high of 1.6241, it was all downhill for the GBPUSD from that point onwards, as it closed at 1.6100.

This was disappointing, as both the manufacturing PMI and Net Lending to Individuals reports came out better than expected. The manufacturing PMI printed a score of 54.1, better than the forecast of 52.1. This marked the 3rd straight month that the index was above the expansion / contraction line of 50. The second report showed that lending surpassed expectations, showing that lending increased from a revised ₤500 million in October to ₤1.1 billion last November. It was expected that lending would increase to just ₤600 million.

This made the pound losses even more compelling in my eyes. Increased manufacturing and lending is bullish for the economy, as it indicates that spending could be picking up. In fact, we saw the pound surge following the release of the reports. However, it was unable to sustain its gains. Looking at yesterday’s trading action suggests that there are still some who are worried about the overall state of the UK economy.

Today, the construction PMI report will be released at 9:30 am GMT. Like the manufacturing PMI, it surveys managers within the construction industry on their outlook of the economy, with 50 being the score that seperates expansion from contraction. This month’s reading is expected to rise increase slightly from last month’s figure of 47.0 to 47.6. Will we see another positive set of data today?

138

Ouch! The pound crumbled under greenback strength for the second day in a row as UK’s poor fundamentals continued weigh down the outlook for their economy. As a result, the GBPUSD broke below support at 1.6060 and tumbled to a low of 1.5965.

The pound suffered several blows yesterday, paving the way for it’s sharp decline. First, UK construction PMI fell short of expectations as it landed at 47.1 instead of climbing from 47.0 to 47.6 in December. This means that the construction industry is still in contraction mode. In fact, UK’s construction industry has been contracting for the past 22 months!

Next, a large US investment firm, PIMCO, announced that they would not buy UK gilts since they are expecting more bond issues this year. This then suggests that the UK could run out of funds to finance its massive debt. It also places UK sovereign debt closer to the possiblity of a credit rating downgrade.

Lastly, UK Finance Minister Alistair Darling emphasized the fact that their economy is still in a recession. Although many are still hopeful that the UK would post positive GDP in the fourth quarter of 2010, Darling’s comments that the economy would expand “at the turn of the year” hints that he believes positive growth would resume during the first quarter of 2010.

Just recently, Nationwide released its index of consumer confidence, which showed that British consumers are becoming less optimistic. The index fell from 74 to 69, much lower than the projected fall to 72.

Moving on, the UK has its services PMI on tap today. Could this allow the pound to get back on its feet and recover some of its losses? The reading for December is projected to post a mere uptick from 56.6 to 56.7. If the actual figure disappoints, then the pound might continue tumbling down.

139

The pound was not able to capitalize on the relatively weak US dollar yesterday as the cable only managed to gain a skimpy 24 pips. The GBPUSD closed at 1.6020 from an opening of 1.5996.

UK’s services PMI came in a tad higher than the 56.7 consensus in December with a score of 56.8. A grade of above 50 indicates expansion in the service sector. Remember that UK’s manufacturing and construction PMI also posted some modest gains during the same period. The rise in these three index further adds to signs that UK’s economy is already out of the recession during the last quarter of 2009. The pound, however, was not able to gain much support despite these improvements.

UK’s Halifax HPI will be reported today at 9:00 am GMT. The number of homes that were financed by the Halifax Bank of Scotland is seen to have gained again by 0.6% on top of the 1.4% marked on the month prior.

The main show of today, though, will be the BOE’s asset facility and interest rate decision at 12:00 pm GMT. Although the UK’s economy is showing signs of life as of late, the BOE is still widely expected to keep its interest rate unchanged at 0.50% and its asset purchase facility at £200 billion in an effort to further boost commercial bank lending during the start of the new year. UK’s CPI is pegged at 1.9% in November, which is 0.1% shy of the central bank’s inflation target. This is another reason why the bank would likely keep its easing policies unchanged.

The central bank’s position to keep its easing policies as is again in spite of some signs of economic improvements could be bearish for the GBP.

140

The pound was not able to capitalize on the relatively weak US dollar yesterday as the cable only managed to gain a skimpy 24 pips. The GBPUSD closed at 1.6020 from an opening of 1.5996.

UK’s services PMI came in a tad higher than the 56.7 consensus in December with a score of 56.8. A grade of above 50 indicates expansion in the service sector. Remember that UK’s manufacturing and construction PMI also posted some modest gains during the same period. The rise in these three index further adds to signs that UK’s economy is already out of the recession during the last quarter of 2009. The pound, however, was not able to gain much support despite these improvements.

UK’s Halifax HPI will be reported today at 9:00 am GMT. The number of homes that were financed by the Halifax Bank of Scotland is seen to have gained again by 0.6% on top of the 1.4% marked on the month prior.

The main show of today, though, will be the BOE’s asset facility and interest rate decision at 12:00 pm GMT. Although the UK’s economy is showing signs of life as of late, the BOE is still widely expected to keep its interest rate unchanged at 0.50% and its asset purchase facility at £200 billion in an effort to further boost commercial bank lending during the start of the new year. UK’s CPI is pegged at 1.9% in November, which is 0.1% shy of the central bank’s inflation target. This is another reason why the bank would likely keep its easing policies unchanged.

The central bank’s position to keep its easing policies as is again in spite of some signs of economic improvements could be bearish for the GBP.

141

The Cable experienced a major hit early in the Asian session but eventually shifted gears and went into consolidation during the US session. From the looks of it, currency traders are holding back on being heavily positioned in one direction as they await the release of the upcoming NFP report.

It seems that the Cable is in a tough spot as UK continues to be plagued by debt worries and poor economic fundamentals. Remember, UK is the only G7 nation stuck in the recession pit and despite some good data here and there, the general state of its economy is weighing heavily on the pound’s value.

In other news, the Halifax house price index for December printed a rise of 1.0% in house prices, higher than the 0.6% increase initially predicted. This marked the sixth month in a row of increase. The report failed to help the Cable find any support though.

The BOE’s rate decision yesterday also failed to create any significant impact on the Cable. In its statement, the BOE said that their £200 billion QE program and 0.50% interest rates would remain as is. The BOE said that they are worried that inflation might be a problem in the future if they are not careful with their stimulus measures.

For today, UK’s PPI is coming out (9:30 am GMT). The prediction is that the prices of goods and raw materials bought by manufacturers fell 0.2% in December, opposite the 0.1% gain seen the month before. The effects of the PPI on the Cable’s price action could be limited though as the US NFP report will be coming out a few hours shortly after.

142

The pound regained some of its form against the dollar, as it got some help from the poor NFP results on Friday. Gains were minimal however, as the greenback was resilient. The GBPUSD pair eventually closed at 1.0628 after hitting as high as 1.6111.

While the pound did gain against the USD, it fell against its European counterparts. This indicates that the gains were primarily due to broad dollar weakness. Seems to me that traders are still down on the pound as the UK situation certainly doesn’t look too bright at the moment.

Some interesting inflation data was released on Friday, as the producer price input and output figures were released. Both input and output figures rose more than expected in November, rising by 0.1% and 0.5% respectively. This means that prices are slowly rising. Traders take note of inflation data because it helps dictates the BOE’s next monetary policy moves. With inflation rising, it gives the BOE less reason to expand their quantitative easing measures. The more quantitative easing, the more likely that we will see inflation rise rapidly. And we wouldn’t want to see a run of hyperinflation would we?

Tomorrow, the BRC retail sales and RICS house price balance reports will be available at 12:01 am GMT. No forecast has been made for the retail sales report, although the last release indicated rising prices in November. Meanwhile, it is expected that housing prices are rising in the UK, as the RICS index is projected to have a reading of 38%. Scores above 0.0% indicate that housing prices are rising, while scores below it indicate otherwise.

Later in the day, at 9:30 am GMT, UK trade balance figures will be made public. The deficit is expected to shrink from ₤7.1 billion to ₤6.9 billion.

143

The pound managed to hold on to its gains against the greenback yesterday as the US dollar rally started to fizzle. However, the pound displayed weakness against its other counterparts, the Yen and the euro.

The UK did not release any economic reports yesterday, allowing the pound to benefit from US dollar weakness. Today, the release of the BRC retail sales monitor and the RICS house price balance should have an impact on the pound’s price action. Retail sales reportedly grew by an annualized 4.2% in December, most likely because of the seasonal effect of the holidays. This suggests that the recovery in consumer spending is much stronger than the performance of the housing sector, which saw a weaker than expected increase in house prices. According to the RICS house price balance, 30% of surveyors reported an increase in house prices, falling short of the consensus of 38%.

Later on, the UK will release its trade balance data. The trade deficit, which stands at 7.1 billion GBP last October, is expected to narrow to 6.9 billion GBP in November. A better than expected figure could provide a boost for the pound.

144

The pound almost had a perfect day yesterday with a win against most of the other currency players except the yen. The cable closed at 1.6167 from 1.6107. The guppy (GBPJPY), on the other hand, fell and settled at 147.07 from 148.34.

UK’s trade balance came in slightly better-than-expected at -£6.8 billion in November versus the -£7.02 billion consensus. The reason behind this improvement was the rise in exports due to the increased demand for consumer goods and chemicals. Exports stood at £20.2 billion during the period. UK’s trade gap with the European Union, however, expanded to £3.8 billion from £3.5 billion. Nonetheless, UK’s better-than-expected trade balance result gave the pound some support.

Today (9:30 am GMT), data on UK’s manufacturing and industrial production for the month of November will be issued. Both manufacturing and industrial production during the period are projected to have risen by 0.3% after coming in flat at 0.0% during the month prior.

UK’s NIESR GDP estimate for the fourth quarter of 2009 will likewise be reported later. The time of the estimate’s release, however, is tentative. Anyway, in its last publication, it showed that UK’s economy gained 0.2% for the three months until November. This growth gives us some signs that the UK may also have expanded during the last quarter of 2009. A positive score here will more likely push the pound higher.