Another miss: manufacturing production rises only +0.3% and industrial production rises at the same rate as well. For the month of June, the UK was expected to show a rebound in manufacturing production: 0.7% after -1.3% and in industrial output: +0.6% after a drop of 0.7% in May.
GBP/USD traded lower, around 1.6855 towards the publication. It immediately fell to 1.6826 before bouncing. In the bigger scheme of things, cable is significantly lower: markets had anticipated a weaker figure and instead of “buying the factâ€, the sell off continued.
Year over year, manufacturing is up 1.9%, lower than 2.1% expected. Industrial output is +1.2% y/y vs. 1.5% predicted. The misses are wide.
There were worries about the manufacturing sector, not only because of the drop seen in May in output, but also due to weaker PMIs. The most recent one for July disappointed with 55.4 points, reflecting slower growth.
On the other hand, the economy in the United Kingdom leans heavily towards the services sector, and the most recent PMI was certainly encouraging.
GBP/USD has not only suffered from its own woes but also dropped due a strengthening US dollar. We have the seen the greenback push ahead also against the euro and other currencies.
Immediate support and resistance levels are 1.6890, 1.6840 and 1.6810. For more, see the GBPUSD forecast.
The chart:
