UK Industrial Production Indicates GDP Could be Revised Higher
THE TAKEAWAY: Industrial production drops 2.5% in June, better than expected -> UK GDP could be revised higher-> Sterling gains against the US Dollar
UK industrial production turned negative in June and dropped at the sharpest rate in 3.5 years. Industrial production was reported 2.5% lower than may, which was better than the expected 3.5% monthly drop in production, and a reverse of May’s 1.0% rise. Industrial production was 4.3% lower than June 2011, which was better than expected and a continued drop from May’s revised 1.8% lower production.
Manufacturing production dropped 2.9% in the UK in June, which was also better than expectations for a 4.3% drop. Manufacturing dropped 4.3% from June 2011, according to the Office for National Statistics.
The ONS said the drop in industrial production could be attributed to the Queen’s Jubilee holiday. Furthermore, because the drop in production was not as bad as expected, it’s possible that the UK GDP for the second quarter could be revised higher.
Initial gains the British Pound made against the US Dollar following the release, rising towards session highs, were quickly erased, as the pair dropped back towards the key 1.5600 psychological line. GBPUSD is still higher in today’s trading.
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