Pound Plummets to a New 2.5-Year Low on Declining Industrial Production
THE TAKEAWAY: UK industrial production declines 1.2% in January -> Signs worsen for Q1 economic growth -> Pound sets a new 2.5-year low
The British Pound set a new 2.5-year low as UK manufacturing production and industrial production disappointed expectations. Industrial production fell 1.2% in January, worse than expectations for a 0.1% rise in production and down from December’s 1.1% rise. Industrial production fell 2.9% from January 2012, according to the UK Office for National Statistics.
Manufacturing fell 1.5% in January, disappointing expectations for no change in production, and down from December’s revised 1.5% rise in manufacturing. The UK total trade deficit was also reported today at 2.362 billion Pounds, slightly better than December’s -2.811 billion Pound trade balance.
The UK economy saw a 0.3% decline in GDP in the fourth quarter of 2012, and is now only one quarter away from a triple dip technical recession. The Purchasing Managers’ Index releases for January and February indicated 0.1% GDP growth in Q1, according to the Markit release. Signs of economic growth are Pound positive.
That is why the worse than expected industrial production release sent the Pound down about fifty points against the US Dollar, and the Cable pair set a new 2.5-year low at 1.4831 in Forex trading. Support might be seen at 1.4630, by the 161.8% Fibonacci expansion of declines starting in April 2012, and resistance may be seen by the key 1.5000 figure.
GBPUSD Daily: March 12, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.