THE TAKEAWAY: UK industrial production rises 0.3% in November, disappointing expectations -> Rise not enough to dispel doubts over Q4 growth -> Sterling declines on news
UK industrial production increased for the first time in four months in December, according to the Office for National Statistics. However, the 0.3% rise in production was a lot less than the expected 0.8% rise, and therefore the Pound saw a 25 point decline against the US Dollar following the release. Industrial production was 2.4% lower than November 2011.
UK manufacturing production declined 0.3% in November, disappointing expectations for a 0.5% rise in production, but still better than October’s 1.3% decline. In the mining and quarrying sector, there was an 8.7% rise in production in November. The energy supply sector saw a 4.1% decline in production.
The UK economy saw positive growth in Q3 of 2012. However, the BoE said the growth may have been due to one time factors, and is not indicative of continued growth in Q4. Today’s release may be slightly more positive, but doesn’t seem strong enough to change the perspective on Q4 growth.
GBPUSD fell more than 20 points in Forex markets following the disappointing increase in industrial production. The pair has only reversed a small part of yesterday’s rally that followed ECB President Draghi’s press conference. Support might next be scene at 1.6089, by the 50% retracement of the rise from November’s low to January’s high.
GBPUSD Daily: January 11, 2013