Pound awaits to take cue from Industrial production

Today at 8:30 GMT, industrial and manufacturing production details would be released for month of May.

Why is it vital?

• Industrial production along with manufacturing is vital for any nation showing the pace of growth and recovery in country's industrial sector, which tends to benefit at times when domestic demand goes up along with export. Moreover industries and manufacturing are key components of country's GDP.

Past trends -

• UK industrial and manufacturing sector had gathered pace in 2013, however started losing pace by mid of 2014.

• In February industrial production grew only 0.1% y/y and manufacturing grew by 1.1% both well below the pace experienced during 2013 growth comeback.

• However, growth has started to come back in UK. In April Industrial production grew by 0.4% on monthly basis but manufacturing continue to disappoint as it dropped -0.4% in April on monthly basis.

Expectation today -

• Industrial production is expected to grow at 1.6% y/y in May and manufacturing production to grow by 1.8% in May on yearly basis.

Impact -

• Pound is trading around 1.554, struggling to decisively break above 1.564 area of resistance.

• As of now, dollar remains well bid against pound but stronger data might reverse that for the day. However, Pound's bearish bias unlikely to ebb easily as long as pound remains below 1.572.