Pound Plummets on a Disappointing Manufacturing Output in May
THE TAKEAWAY: UK manufacturing output unexpectedly declines 0.4% -> Factory decline contrasts a rising manufacturing PMI -> Pound plummets
The Pound plummeted below 1.4900 against the US Dollar following a surprise decline in manufacturing production in May. UK industrial production levels were unchanged between April and May, disappointing expectations for a 0.2% rise in production and up from April’s revised 0.1% decline in industrial production. Manufacturing production declined 0.8% in May according to the UK Office for National Statistics, disappointing expectations for a 0.4% rise.
Also announced in the UK today, the total trade balance for May was reported at -2.435 billion Pounds, disappointing expectations for -2.6 billion and down from the revised 2.073 billion Pound trade deficit in April.
The reported decline in the manufacturing output comes in contrast to the recent rise in manufacturing PMI’s, which was reported at 51.5 in May and then 52.5 in June. Markit predicts 0.5% GDP growth in Q2 based on the PMI’s from the quarter. Therefore, the selloff in the Pound may have been due to doubts casted on the strong PMI growth forecast.
GBP/USD continues to trade below 1.4900 at the time of this writing, and a three year low that was recently set at 1.4831 may continue to provide support. The key 1.5000 figure may provide resistance in Cable trading.
(How does a Currency War affect your FX trading? Take our free course to find out!)
GBPUSDDaily: July 9, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.