Pound Temporarily Pops On Impressive Manufacturing Production Gain
THE TAKEAWAY: Manufacturing Production rises 1.9% in June -> Higher factory output agrees with recent PMI gains -> Pound rallies, but soon erases gains
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UK manufacturing production rose 1.9% in June, marking the second-largest monthly rise in factory output in eight years.
The rise in manufacturing production beat expectations for 1.0% and was higher than the 0.7% decline in factory output seen in May; in July of last year, manufacturing production rose 3.1% from the previous month. Factory output rose 2.0% from June of 2012, according to the UK Office of National Statistics.
UK industrial production rose 1.1% in June from the previous month, also beating expectations for a 0.7% rise in production and better than the unchanged industrial production level seen in May.
The UK economy expanded 0.6% in Q2 of this year, and indications from Markit’s PMI have only improved in the third quarter. The Bank of England will release a quarterly inflation report during tomorrow’s session, and traders will be paying attention to the central bank’s sentiments on economic growth, following the disappointment in the rate of recovery expressed in July’s forward guidance from the BoE.
The Pound saw a brief 20 pip rally against the US Dollar following the industrial production release, but those gains were quickly erased, possibly because the gains were in line with higher PMI’s. A monthly high at 1.5434 may now provide resistance for Cable trading, and a broken resistance line around 1.5250 may see support.
GBPUSD Daily: August 6, 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 .