British manufacturing and industrial production rose less than expected in April but broke, following three consecutive months of declines. The Office for National Statistics reported on Friday that manufacturing production climbed 0.2% on a seasonally adjusted basis in April, falling behind expectations for a 0.8% rebound and following the preceding month's drop of 0.6%. On a yearly basis, manufacturing production remained unchanged in the reported month, after climbing 2.2% in March. Friday's report also showed that industrial production in Britain advanced 0.2% month-over-month in April, compared to the previous month's fall of 0.5%, although analysts anticipated an increase of 0.7%.
On an annual basis, industrial production declined 0.8% during the reported month, following the preceding month's climb of 1.4%. Other report released by the ONS on Friday showed that the country's goods trade gap narrowed to £10.4B in April, whereas the prior month's trade deficit of £13.4B was revised down to £12.0B. The narrowing of the gap was driven mainly by lower imports that dropped more than 5% in April.
Uneventful Monday
GBP/USD takes a breath
After Thursday's fall the Cable has entered a period of stagnation, which could just be a calm before the storm, with this week's Fed and BoE meetings due. Consequently, no significant changes are likely to occur ahead of those meetings, meaning the GBP/USD pair is likely to remain relatively unchanged and hold around the monthly S1 of 1.2758. Risks remain skewed to the downside, as that door got open by the election results in the UK, with the Pound now being exposed to the 1.25 area. Technical indicators suggest the Sterling is to weaken against the Buck today, but the 1.27 major level is expected to hold for the time being. In case this psychological support is breached, the next target will be the monthly S2 at 1.2624.
Hourly chart
Daily chart
Traders remain neutral
Market sentiment remains somewhat bullish, as 57% of all open positions are still long. At the same time, there are only 51% of all pending orders set to acquire the British Pound.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 58% of all open positions are short and the remaining 42% are long. Meanwhile, sentiment at Saxo Bank is also bearish, with 59% of traders now being short and the other 41% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound recovering
Traders believe the Cable is to fall under the 1.30 major level by the end of the next three months, as 54% of survey participants share this belief. While the current price is around 1.27, the average forecast for September 12 is 1.284. The 1.34-1.36 range is still the most popular price interval, having 23% of the votes, while on the second place is the 1.20-1.22 interval, with 18% of the voters choosing it.