"We need to provide a lot of stimulus, but that stimulus can create risks"
- Mark Carney, Governor of the BoE
The Pound traded flat against the greenback on Tuesday, retreating from more than a three-month high after data showed bigger-than-expected trade gap, while manufacturing production came in line with analysts' forecasts. In addition to that, Mark Carney said the economy requires additional stimulus from the central bank and pledged to maintain vigilance over the risks that accommodative policy will create conditions for the housing bubble.
Following optimistic data from Markit, the Office for National Statistics said that Britain's industrial output advanced for a second month in October, in further sign the recovery maintains momentum at the beginning of the final quarter. Output inched higher 0.4% from September, when it advanced 0.9%, however, taking into account latest economic reports there were signs manufacturing production can surprise markets to the upside. Factory output rose 0.4% as well, while the extraction of oil and gas plunged 2.5% over the corresponding period.
At the same time, a separate report showed that the deficit on trade in goods and services narrowed more than expected, hitting 2.6 billion pounds in the middle of the autumn, even despite the overall trade in goods with the largest trading partner, the European Union, soared to a record shortfall of 6.5 billion pounds.
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