In spite of strong readings of the UK Industrial and Manufacturing Productions yesterday, the Sterling continued to suffer from the upcoming EU referendum concerns. The Pound slumped the most against the Swiss Franc, namely 0.90%, while also sustaining considerable losses versus the Commodity currencies – 0.67% versus the Kiwi, 0.60% against the Loonie and 0.45% against the Aussie. The GBP/JPY also edged significantly lower (0.63%), while the British currency edged down 0.59% against the European single currency, but held the strongest against the US Dollar, but still declining 0.28% against it yesterday.
Manufacturing production in the UK advanced further bolstering optimism about the domestic economy. UK manufacturing as well as industrial production data outperformed major economists' expectations in April being mainly influenced by the weaker cable due to upcoming Britain's EU referendum. According to the latest figures released by the Office of National Statistics, manufacturing production skyrocketed 2.3%, against March's 0.1%, and an expected growth of 0%. Industrial production, in turn, jumped by 2% in April, adding 0.3% from March, and far above the 0% reading expected. On a yearly pace, manufacturing production added 0.8%, showing much better results than a forecasts for a 1.5% decline as well as after a steep 1.9% drop in March. Concerning industrial production, this data demonstrated an increase of 2.0% following a gain of 0.3% in the preceding month and in line with forecasts.
Meanwhile, analysts warned that despite such a positive figures which provided a strong boost to the economy, it was still too early to say whether the industrial sector had totally strengthened. Moreover, following data spurred the pound, which currently is suffering upcoming Brexit poll's results.
UK Goods Trade Balance and US Jobless Claims
GBP/USD attempts to maintain trade above 1.46
The British Pound traded in a rather tight range between the 1.45 and the 1.46 major levels on Wednesday, but with the bearish bias prevailing. The closest resistance area is represented by the 20-day SMA, the weekly and the monthly PPs, however, is unlikely to limit the Cable's movements, as it failed to do so previously. The Sterling remains under the risk of falling towards the ascending channel's support line at 1.4430, unless the interim demand in face of the 1.46 psychological level triggers a rally. In this case the 1.46 will still be the main target, but technical indicators are unable to confirm either scenario.
Daily chart
Hourly chart
Bulls and bears remain in balance
Market sentiment weakened over the day, as only 52% of all open positions are now long, compared to 58% on Wednesday.
Compared to Tuesday, there are also slightly less bulls at OANDA - they take up 57% of the positions open with the Canada-based broker. Sentiment at Saxo Bank, however, remains close to neutral, as here the number of bears exceeds the number of bulls by four percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.46 in three months
The majority of traders (51%) believe the British currency is to cost 1.46 or more dollars after a three-month period. The most popular price interval was selected by slightly less than a fifth (15%) of the voters, namely the 1.46-1.48 one, while the second most popular choice implies that the Sterling is to cost between 1.42 and 1.44 dollars in three months, chosen by 14% of the surveyed. At the same time, the mean forecast for Sep 09 is 1.4568.