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.
No significant data after UK CPI
GBP/USD: downside risks persist
The British currency was able to outperform the US Dollar on Monday, but with gains limited by the tough resistance cluster around 1.2425. This cluster could prevent the Cable from recovering further, with the exchange rate once again slipped under the 1.24 mark, paving its way towards the support area just above 1.23, represented by the weekly S1 and the lower Bollinger band. However, technical indicators are unable to confirm the possibility of the bearish outcome today, thus, there is a chance the Sterling could post gains, but the second supply area, namely the weekly R1 at 1.25, is to remain out of reach.
Daily chart
- Hourly chart
Traders mostly bullish
There are 57% of traders being long the British Pound today, compared to 61% yesterday. At the same time, the portion of orders to sell the Sterling inched higher, namely from 53 to 56%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA turned somewhat bearish today, but there are not significantly more bears than bulls, namely 53% of all open positions are short and the remaining 47% are long. Meanwhile, sentiment at Saxo Bank worsened over the day, with 56% of traders now being long and the other 44% 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 fall under the 1.22 major level, as 52% of survey participants believe so. While the current price is around 1.24, the average forecast for July 11 is 1.2304. The 1.18-1.20 range is now the most popular price interval, having 16% 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.