November UK Manufacturing Production advanced by 1.3 percent in November 2016, yet the GBPUSD remains on the bearish side.
11 January, AtoZForex – The UK Office for National Statistics just released the UK industrial and manufacturing output figures. The figures came at 1.3%, in comparison with markets expectations of 0.6%.
November UK Manufacturing Production on the rise
Traders eye this release as it is serving as a key indicator of the UK’s economic health. Specifically, the release measures the change in the total inflation-adjusted value of output produced by manufacturers. The UK manufacturing production release is published monthly. The manufacturing production is making up around 80% of total industrial production across the UK.
The release indicated that the total inflation-adjusted value of output produced by manufacturers increased by 1.3% in November 2016. The key highlights from the UK Office for National Statistics are as follows:
In November 2016, total production was estimated to have increased by 2.1% compared with October 2016.
The increase in production was due to an increase in mining and quarrying output following the end of a maintenance period in the oil and gas industry and an increase in manufacturing.
The monthly estimate of manufacturing increased by 1.3% in November 2016; the largest contribution came from pharmaceuticals, which increased by 11.4%. Pharmaceuticals can be highly erratic, with significant monthly changes, often due to the delivery of large contracts.
The month-on-same month a year ago estimate of total production increased by 2.0% in November 2016, with increases in all 4 main sectors; the largest contribution came from manufacturing, 1.2%.
Trading Doc, the market analyst at AtoZForex, has commented on the release:
“Although UK Manufacturing Production data came in positive at 1.3% , this was negated by the increased UK trade balance deficit to -12.2B. We remain bearish on GBP with markets eagerly waiting for BoE Governor Mark Carney speaking later this afternoon. I expected price to break the 1.2110 later today for the following reasons,
• Price is below the both the hourly 20sma and 100sma moving average,
• 100sma giving us our trend direction on the bearish side.
• looking at our other indicators, MACD is starting to slope down and below the zero line will RSI is in the sell zone.
The 1.2110 level is a major level from a psychological, technical and fundamental level. It has been tested several times and further weakening of this support level. Expecting price to break through the 1.2110 level sooner rather than later.”
Prior to the release, the market consensus stood at 0.6 percent increase in the change of manufacturing output value. The figures for October 2016 indicated a decrease of 0.9 in the data. Moreover, the markers were also pricing for the 0.8% m/m jump in the total industrial production in November. This is in comparison with October -1.3% decrease in the production.
Additionally, before the release, market experts believed that the announcement may trigger a whip in GBP markets. Moreover, they stated that the positive data would appear as a rescue for the GBP bulls. Currently, the Pound is struggling to rally due to increasing so –called ‘hard’ Brexit concerns.
The market analysts were expecting the cable to recover to the resistance of 1.22 in case of a better-than-expected release. However, the negative print would cause GBPUSD top drop to multi-week lows of 1.2104, as experts said before the announcement.
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