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British manufacturing production was lower than the low expectations and disappointed with a small rise of 0.2%. A rise of 0.3% was expected. GBP/USD extends its drops.

GBP/USD already weakened earlier in the day, falling towards the support region of 1.6280 – 1.63. This weak figure sends the pair below 1.6280. The break down still needs to be confirmed.

Manufacturing was one of the drivers of the British economy until a few months ago, but also this sector significantly slowed down, as seen in the last two purchasing managers’ indices. Last month was also bad, with no change in manufacturing, when expectations were higher – a rise of 0.6%.

The wider figure of industrial production was a bigger disappointment – it rose by only 0.3%, when 0.9% was predicted. Last month saw a sharp drop of 1.2%. Manufacturing is about 80% of all industrial output.

Earlier in the week, Mervyn King surprised and gave a boost to the pound. The Bank of England raised the inflation expectations and wasn’t too harsh on growth.

But the rise was temporary, and the fresh fears about the situation in the euro zone strengthened the dollar, and eventually weakened GBP/USD as well.

GBP/USD is now significantly below support, at 1.6260. An important cushion is at 1.6110, followed by 1.60. Resistance is at 1.6280 – 1.63, followed by 1.64.

For more on sterling, see the GBP/USD Forecast.