UK manufacturing and industrial production data came in ahead of expectations for May, with both figures a big beat on the forecasts of economists. Manufacturing production decreased 0.5% on a monthly basis in May, down from April when it rebounded 2.3%, while the indicator came in at 1.7% on a yearly basis in the same month. Both readings beat the estimates of -1.2% and 0.6%, respectively. Overall industrial output fell 0.5% on a monthly basis in May, after a revised rebound of 2.1% seen in April. The reading did, however, beat the forecast of a negative 1.0%. On an annual basis, the gauge rebounded 1.4% in the fifth month of the year, while markets had bet on a 0.5% advance in the reported month. Industrial and manufacturing production show the volume of production in the UK's industrial and manufacturing sector, and the indicators have been volatile since the beginning of the year.
The data might look good, but, in general, both of them fell from a strong base in April, and that is before accounting for the potential crash as a result of the UK's vote to leave the European Union in June. Moreover, analysts expect the Brexit vote to have a profound influence on the country's economic performance not only in the months following the vote, but also in the years ahead.
UK Goods Trade Balance, US Unemployment Rate and Nonfarm Payrolls
GBP/USD muted ahead of US NFP data
The GBP/USD currency pair's trade was rather subdued on Thursday, with the bearish momentum ultimately prevailing. However, the immediate support in face of the weekly S2 remained intact, preventing the Pound from sustaining sharper losses for the second day, indicating that a possible rebound could occur today. A lot depends on the US fundamental data; in case it turns into Sterling's favour, the pair is expected to retest the 1.32 mark. On the other hand, the Buck could continue strengthening, leading the Pound further down towards the 1.2640, where the weekly S3 and the monthly S1 form a strong support area.
Daily chart
Hourly chart
Bulls remain in control
Bulls remain strong, taking up 63% of the market (previously 65%). All pending orders are equally divided between the buy and the sell ones.
Compared to Wednesday, there are slightly less bulls at OANDA - they take up 57% of the positions open with the Canada-based broker. Sentiment at Saxo Bank grew stronger, as here the number of bulls exceeds the number of bears by 20 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.40 in three months
More than half of traders (54%) believe the British currency is to cost 1.40 or less dollars after a three-month period. The most popular price intervals was selected by only 14% of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost between 1.36 and 1.38 dollars in three months, chosen by 12% of the surveyed. At the same time, the mean forecast for Oct 08 is 1.3916.