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British Production Numbers Strong

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British Industrial and Manufacturing Production figures have just been released for the month.

Industrial Production (year-over-year) is up 2.9%, this is against a consensus figure of 3.0% and a previous reading of 1.8%. The monthly rise however is only 0.1% versus consensus of 0.2% and a previous of 0.4%.

Manufacturing Production (year-over-year) is also up, posting a figure of 3.3% meeting the consensus expectation of 3.3% and more than doubling the previous reading of 1.5%. The month-to-month change in this figure is 0.4% against expectations of 0.3% and a prior month report of also 0.3%.

These Industrial and Manufacturing figures are a key short-term indicator of the robustness of the British economy and are a major contributing factor to the country’s Gross Domestic Product figures. The key difference between the numbers is that the Industrial figure includes mining activities whereas the Manufacturing number is pure factory output.

Today’s production data set will be seen as further validating the growth recovery in the UK, both sets of figures are at or as close to consensus as makes no difference, the key being the dramatic improvement being seen in the trend.

Currency markets naturally appreciated this confirmation of the health of the British economy. The Pound had been having a down morning until the publication of these numbers reversed the trend, this morning’s 30 point drop in Sterling against the Dollar has been fully eliminated as the British pound springs into life. Traders have taken Cable back above the opening level, removing 3 short-term resistance points in the process.

The Pound however has a lot of work to do to reclaim yesterday’s dramatic 120 point plunge. The key long-term resistance level of $1.68 is still in play for Sterling, it will however take much more than manufacturing data to provide the necessary momentum. If today’s Inflation Report Hearings don’t offer any direction then it is unlikely that we will see any fundamental driven moves this week in the absence of important data.

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