With fears of ‘Brexit' weighing on the UK currency pair, losses were registered across the board on Wednesday, with the only exception being the Cable. Weak UK Manufacturing and Industrial Productions data also played its part in the Pound's underperformance yesterday, triggering a 0.84% decline against the Kiwi and 0.74% versus the safe haven Yen. Other notable losses of 0.48%, 0.43% and 0.40% were registered against the Swiss Franc, the Euro and the Loonie, respectively. At the same time, the smallest loss of 0.13% was detected against the Australian Dollar, while the Sterling managed to add 0.04% against American currency,
Britain's manufacturing output recorded the biggest annual decline in any month for nearly three years, fuelling fears over the health of the country's overall economy. The Office for National Statistics said UK manufacturing output edged up by only 0.1% in March on a seasonally-adjusted basis, after falling 0.9% in February. Factories production in March was down 1.9% on the same month of last year, the sharpest year-on-year decrease since May 2013. Manufacturing, which makes up 70% of industrial production, has been hard hit by the crisis in the steel sector. The official data also showed that total industrial production, which is made up of manufacturing, mining and quarrying, North Sea oil and gas, water supply and the supply of electricity and gas, rose to 0.3% month-on-month from a decline of 0.2% a month before, but less than expected. The production was primarily driven by stronger output in electricity and gas that rose 3.3%, which was due to unseasonably cold weather in March. Britain's industrial production is 10% lower than it was when the UK entered recession in early 2008.
The ONS added the updated industry figures will have no real effect on the second estimate of the GDP in the first quarter. The first estimate showed the British economy grew 0.4%.
BoE Monetary Policy Summary and the Official Bank Rate, US Jobless Claims and Import Price Index
GBP/USD poised for more gains
The Cable remained relatively unchanged against the US Dollar on Wednesday, having edged only seven pips higher. As a result, the target level was not retaken, leaving that opportunity for Thursday. The GBP/USD pair today opened between the 20-day SMA from the upside and the monthly PP from the downside, but either one of those levels risk being pierced today, as they failed to contain the Sterling's movements since the beginning of the week. Technical indicators are also unable to provide any clear sense of direction, but the monthly ones remain tilted to the upside, suggesting that the 1.45 mark could be reconquered after today's BoE rate decision.
Daily chart
Hourly chart
Bulls now in the majority
Today 60% of traders hold long positions, compared to 55% yesterday. Meanwhile, the share of buy orders declined from 54 to 44%.
At OANDA the bullish market sentiment keeps growing, as 56% of their open positions are long, and the remaining 44% are short, unchanged since yesterday. Meanwhile, the sentiment at SAXO Bank remains close to the equilibrium, as 53% of their open positions are currently short, compared to 52% on Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.44 in three months