British manufacturing production plunged by 1.5%, much worse than an unchanged figure that was expected. Also producer prices fell more than expected, with PPI Input dropping by 2%. GBP/USD that made big losses before the publications (rumors?) is now bouncing on a “sell the fact” behavior. The bad data leaves room for a resumption of falls.
This plunge in manufacturing production sends the volume back to the levels seen at the beginning of the year, and erases some months of rises. Also the wider figure, industrial production, took a dive of 1.7%. A rise of 0.1% was expected.
PPI Input, the main figure for producer prices, was expected to drop by only 1.2% in May. It’s important to note that the drop of 2% comes on the background of an upwards revision from 2.6% to 2.8%. PPI Output rose by 0.2%, slightly less than +0.3% that was expected.
GBP/USD already lost support before the release and went as low as 1.6210 afterwards. It now bounced back to around 1.6260. Leaks to data are very common in the UK recently.
Consumer Inflation Expectations published by the Bank of England for the month of May were at 3.9%, lower than 4% last month.
The falls might resume, as this is terrible data indeed.
Yesterday, trade balance came out better than expected in Britain, and it managed to temporarily cheer up the pound. This was only temporary.
The fall began earlier in the day GBP/USD held above 1.6360 but after it lost this level, it also lost support at the region of 1.6280 to 1.63 and reached the lowest levels since May 25th.
Further support is at 1.6110 followed by 1.60. Previous support at 1.6280 is now resistance, followed by 1.6430. For more levels and analysis, see the GBP/USD forecast.
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