UK data is a bit mixed: manufacturing is down 0.9%, worse than expected but with an upwards revision. But industrial production is up 0.1%, better than expected but with a downwards revision. Year over year, manufacturing is up 0.8% and industrial output is up 2.1%: one figure beats estimations while the other misses.
GBP/USD initially rises but eventually slips under 1.34. The pair initially advanced from 1.3405 to 1.3420 but now trades at 1.3380. It seems that the negative sides of the report have taken over.
Or perhaps, is this a “take profit” reaction? The pound enjoyed many days of gains, and the mixed data probably allows for some consolidation.
The UK was expected to report a drop of 0.4% in manufacturing production in July after a drop of 0.3% in June (before revisions). Year over year, a rise of 1.7% was expected to follow a 0.9% rise. The wider industrial output number carried expectations for a drop of 0.2% after advancing 0.1%. Y/y, an increase of 1.9% was projected to follow 1.6%.
GBP/USD traded above 1.34 ahead of the publication, above support at 1.3360 and below the all-important cap of 1.3480, the post-Brexit high.
The British pound enjoyed a winning streak of purchasing managers’ indices. On the other hand, the US dollar suffered a losing one: a poor services sector gauge, as well as a mediocre jobs report, weighed heavily on the greenback.
More: GBP Tactical Rally Intact For Now; Revising Our BoE Easing Call – Morgan Stanley