Manufacturing production in the UK, which accounts for 10.1% of the British economy, unexpectedly declined for the first time in five months in October, while industrial output also fell, according to the Office for National Statistics. Manufacturing production dropped 0.7% after increasing 0.6% in September and against analysts' expectations for a 0.2% gain. Measured on an annual basis, manufacturing output rose 1.7% in October, considerably below market consensus of a 3.2% increase. The report also showed industrial production fell 0.1% on month in October, while year-on-year industrial output rose 1.1%. Despite the disappointing results revealed, a survey conducted by the Confederation of British Industries last month showed the manufacturing sector's recovery continued in October but was weighed by weak exports.
Meanwhile, the market is continuing to evaluate the US job market that is one of the most important US sectors. The latest Job Openings and Labor Turnover Survey showed US employers posted 4.834 million job openings in October, slightly more than 4.7 million in the preceding month. The number of job openings in the private sector was little changed, while the figure dropped for government positions in the month under review. The monthly JOLTS is preferred by the Fed Chair Janet Yellen as a more accurate picture of economic conditions than the weekly or monthly jobs numbers. Last week data showed US companies added 321,000 non-farm payrolls in November, overshooting expectations for a 230,000 gain. This is the biggest monthly increase since January 2012.
Britain's trade balance to be announced
After the disappointing UK's manufacturing data yesterday, the market will price in the nation's trade balance. Nonetheless, we do not expect these data to impact the pair's position significantly. However, all in all this is going to be relatively calm week, after previous two, when a great amount of data were announced.GBP/USD on a gradual down-trend
Already for more than a month GBP/USD is testing the strength of the down-trend, especially its upper trend-line, that started to take its shape on July, when the pair reached a six-year high at 1.7193. The pair's trading range is becoming narrower and that could potentially provoke a break-out. Since the Pound has reached this year's low just recently, we expect a bullish break-out to be the case; however, there still is a downside risk of the pair falling lower, if it fails to breach the monthly R1 at 1.5921.Daily chart
The pair has recovered from the lowest level this year, although, it still fluctuates nearby. Currently, the pair is supported by the weekly PP that is located at 1.5641, but we do not think that the pair will be able to hold back the pressure from pair's bears and the strongly bearish technical indicators in daily and weekly range.
Hourly chart