- Rob Dobson, Senior Economist at Markit
On Tuesday the Pound appreciated versus all major currencies and it seems that a boost provided by the stronger-than-expected gain in industrial production is likely to provide a long-term boost for the currency. It seems that the Pound will continue climbing further and will find strong resistance around 0.79 versus the Euro, 1.52 against the Franc, 173.21 versus the Yen, while the cable will face strong resistance at 1.69-mark.
A widely anticipated report from the Office for National Statistics showed that industrial output expanded for a third straight month in April, pushing the annual gain to the biggest since 2011. Output at manufacturers, mines and utilities rose 0.4% from March, when it climbed 0.1%. On a yearly basis the output soared 3%. At the same time, manufacturing sector alone posted its fifth monthly increase in activity and contributed 0.3% to the total production. What is more important, inflationary pressure on manufacturers has eased over the last months, with the total input prices deflation 5.5% in April, posting a sixth consecutive monthly drop.
Despite promising picture, it is important to keep in mind that the sector accounts only for 10% of the overall economic output, hence Tuesday's report is unlikely to have a significant impact on the central bank's policy.
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