Downbeat U.K. data sends sterling lower, damps hopes for U.K. rate hike

On Wednesday the pound hit session lows after data showed that U.K. industrial output unexpectedly fell in July. A separate report showed that the country’s trade deficit widened sharply. 

GBP/USD was down 0.26% to 1.5355 from around 1.5398 ahead of the data. The pair subsequently consolidated at 1.5360, higher 0.23%.

Earlier, the Office for National Statistics said U.K. industrial production dropped by 0.4% in July and rose just 0.8% from a year earlier.

Manufacturing production dipped 0.8% in July, the largest fall since May 2014 and was 0.5% lower on a year-over-year basis.

The report explained that the steep fall came as output dropped sharply at transport equipment makers and manufacturers of basic metals & metal products.

Another data from the ONS signaled that the U.K.’s trade gap widened sharply in July, expanding to £11 billion, the largest shortfall since July 2014, as exports plunged by almost 10%.

The weak data dampened expectations for higher U.K. interest rates.

Sterling was also lower against the euro, with EUR/GBP rising 0.19% to 0.7290. The pair subsequently consolidated at 0.7252.

Meanwhile, the greenback remained broadly stronger as prospects of more economic stimulus by China bolstered risk appetite.