LONDON — Questions are being raised once again about the possibility that market sensitive economic data is being leaked from within the Office for National Statistics just weeks after the data office announced tough new measures to crack down on any leaks.
The pound slid quickly on Tuesday in the minutes before the ONS released its monthly inflation data, which showed a substantial fall — from 2.9% to 2.6% — in the headline figure.
Sterling dropped from roughly 1.3120 against the dollar around 45 minutes before the release to around $US1.3040 as the inflation number came out, following a similar pattern to the one that aroused suspicion that there may be leaks earlier in the year.
Here is the chart:
“Given the suspicions that ONS data was being leaked, it is worrying to see another correct move just before the release. The measures taken by the ONS may possibly have been insufficient,” David Woolcock, chairman of the committee for professionalism at ACI The Financial Markets Association told Reuters.
Prior to the release, Reuters journalist Andy Bruce speculated on Twitter that a significant move from the pound before the numbers could suggest a surprise:
Concerns about possible leaks first arose in March when the Wall Street Journal reported the findings of an analysis by Alexander Kurov, associate professor of finance at West Virginia University, of price data in the hour before key economic data was released, covering the period April 2011 to December 2016.
Professor Kurov found that bond future prices moved on average by 0.029% in the direction they would continue to move after the data was published, suggesting someone had inside information.
Professor Kurov told the paper: “Based on what I see in the data in this case, it is very unlikely that we are looking at a random pattern.”
Previously, the ONS gave out data on inflation, unemployment, wages, and retail sales to a handful of Britain’s most important decision makers — including the prime minister, the Chancellor of the Exchequer, and the Secretary of State for Business Energy and Industrial Strategy — 21 hours before the data’s official release.
While leaks are a possibility, it could simply be the case that market participants are taking a punt on possible outcomes ahead of time.
Speaking to the Times, BNY Mellon’s Head of Currency Strategy Simon Derrick noted that Sterling rallied strongly overnight into Tuesday morning, and that traders may simply have been readying themselves for a shock, rather than acting on any actual knowledge.
“Discretion is the better part of valour and in a thin summer market you can get a big move,” he said.
Business Insider has contacted the ONS for comment.