In February, British total production experienced a 0.7% decrease compared to the previous month, the Office for National Statistics reported on Friday. The revealed figures did not justify experts' forecasts, as they expected to see a 0.3% increase. The decline was registered in all four major sectors. Nevertheless, the largest drop occurred in the electricity and gas industry, where downfall reached 3.4%. It was attributable to lower electricity generation and gas supply amid unusually high temperatures. Another major fall happened in the pharmaceutical, chemical products and crude petroleum industries, where growth plunged 4.4%, 2.1% and 2.6%, accordingly. In contrast, the largest gains were posted by the textiles and electrical equipment industries, where production increased 3.0% and 2.3%, respectively.
However, it was not enough to offset the overall negative output of the manufacturing sector, which lost 0.1%, due to the erratic performance of pharmaceutical industry. Nevertheless, on a yearly basis, total production advanced 2.8% in February. Three out of four major sectors showed positive results. Yet, the largest contribution was made by the manufacturing sector, which posted a 3.3% increase, following a gain of 2.6% in the previous month.
A relatively quiet Monday
GBP/USD takes a breath after Friday's plunge
A rather unexpected development occurred on Friday, being that the British Pound fell under sharp selling pressure, while the Greenback soared across the board. The US NFP data sharply disappointed, but an upbeat reading of the unemployment rate, as well as a surge in US Treasury bond yields, were the catalysts. As a result, the Cable slumped back under 1.24, breaching the tough support cluster, which somewhat confirms the six-month down-trend. Technical studies insist the GBP/USD pair is to undergo a bullish correction today, but downside risks remain high, with the nearest support located only at 1.2310, namely the weekly S1.
Daily chart
- Hourly chart
Traders mostly bullish
Today 61% of traders hold long positions (previously 59%), whereas 53% of all pending orders are to sell the Pound, up from 50% on Friday.
A less optimistic situation is observed elsewhere. The sentiment at OANDA turned somewhat bullish, but there are not significantly more bulls than bears, namely 54% of all open positions are long and the remaining 48% are short. Meanwhile, sentiment at Saxo Bank worsened over the weekend, with 58% of traders now being long and the other 42% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
By the end of the next three months traders believe the Cable is to rise above the 1.22 major level, as 53% of survey participants believe so. While the current price is around 1.25, the average forecast for July 10 is 1.2342. The 1.18-1.20 range is now the most popular price interval, having 15% of the votes, while on the second place are the 1.20-1.22 and the 1.30-1.32 price ranges, with 12% of poll participants choosing each of them. Furthermore, the 1.16-1.18 and the 1.26-1.28 intervals were both selected by 10% of the voters.