Pound Sterling Remains Elevated on Industrial data
The British pound remained elevated after UK industrial and manufacturing output rose in October, adding further credibility to the UK’s impressive recovery pace.
Pound sterling surpassed 1.64 US on Monday after Bank of England Governor Mark Carney said the central bank would not pursue any rate changes to control economic recovery, but would instead consider other policy tools to keep the growth pace steady. The British pound is the best performing developed-nation currency of the past six months, led by rapid growth in manufacturing, construction and the housing sector.
UK industrial production rose 0.4 percent in October and at an annualized rate of 3.2 percent. Manufacturing output, the largest component of total production, rose at an annual rate of 2.7 percent. Total production in manufacturing rose 0.4 percent between September and October.
The biggest contributor to industrial output came from the transport equipment, where production increased 16.8 percent annually. The production of motor vehicles was responsible for the majority of the growth in this category. Production in mining and quarrying rose 13.4 percent, while water supply and waste management rose 8.8 percent, according to official data from the Office for National Statistics.
The British pound reached a session high of 1.6430 US in the mid-day North American trade, a gain of 8 pips. The GBPUSD has gained more than 2 percent over the past month.
The trend index is slightly bearish, with initial resistance at 1.6486. A breach of this key level exposes 1.6528 and eventually 1.6569. Supports are ascending from 1.6293, 1.6334 and 1.6374.
Sterling was unable to rally against the euro, which was supported by an unexpected revision to Italian GDP. The Eurozone’s third largest economy ended eight consecutive quarters of contraction, after a revised GDP estimate showed Italy’s economy stagnated in the third quarter. The EURGBP hit a session high of 0.8390 before consolidating 10 pips lower. The pair was registering a gain of 16 pips, as of the mid-day North American session.
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