The British pound continued to be weak against the other major currencies in the early European session on Tuesday amid risk aversion, as a rout in oil prices and sluggish trade data out of China sapped the demand for high yielding assets.
Growing fears over the interest rate hike in the U.S. this month also kept investors nervous.
The U.K.’s FTSE 100 index is currently down 0.48 percent or 29.85 points at 6,193, France’s CAC 40 index is down 0.57 percent or 27.15 points at 4,729 and Germany’s DAX is down 0.29 percent or 31.88 points at 10,854.
The oil prices tumbled overnight in reaction to last week’s OPEC’s decision to not cut production.
The weak trade data out of China fueled concerns over the health of the world’s second-largest economy.
Data from China’s General Administration of Customs showed that Chinese exports declined at a faster-than-expected pace in November. Exports dipped 6.8 percent year-over-year in November, exceeding economists’ expectations for a 5.0 percent decrease.
Imports fell 8.7 percent in November from a year ago, though much slower than the 11.6 percent drop expected by economists.
The visible trade surplus of the country came in at $54.1 billion in November. The expected surplus was $63.5 billion.
Meanwhile, the currency changed little after the release of U.K. industrial and manufacturing data.
Data from the Office for National Statistics showed that U.K. industrial output edged up 0.1 percent in October from September, when it remained flat. The monthly growth rate came in line with expectations. On a yearly basis, growth in industrial output improved unexpectedly to 1.7 percent from 1.5 percent. Economists had forecast a 1.2 percent rise for October.
The manufacturing output declined for the first time in three months in October. Output fell 0.4 percent, reversing a 0.9 percent rise in September. Output was expected to drop marginally by 0.2 percent. The manufacturing output slid 0.1 percent but slower than September’s 0.4 percent decrease. It was expected to remain flat in October.
In the Asian trading today, the pound was trading lower against its major rivals
In the early European trading, the pound fell to 5-day lows of 1.5002 against the U.S. dollar, 184.64 against the yen and 1.4972 against the Swiss franc, from early highs of 1.5061, 185.75 and 1.5062, respectively. If the pound extends its downtrend, it is likely to find support around 1.49 against the greenback, 183.00 against the yen and 1.47 against the franc.
Against the euro, the pound dropped to a 5-day low of 0.7237 from an early high of 0.7194. On the downside, 0.74 is seen as the next support level for the pound.
Looking ahead, Canada housing starts for November and building permits for October and U.K. NIESR GDP estimate for November are set to be published in the New York session.
At 12:50 pm ET, Bank of Canada Governor Stephen Poloz will give a speech at the Empire Club of Canada and hold a press conference, in Toronto.
The material has been provided by InstaForex Company – www.instaforex.com