Pound awaits to take cue from Industrial production

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

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 July Industrial production shrank by -0.4% on monthly basis and manufacturing continue to disappoint as it dropped -0.5% in July on monthly basis.

Expectation today -

• Industrial production is expected to grow at 1.2% y/y in August (+0.3% m/m) and manufacturing production expected to shrink by -0.1% in August on yearly basis (+0.3% m/m).

Impact -

• Pound is currently trading at 1.528 against Dollar, looking to gain further as it found some interim support around 1.512-1.518 area.

• If better data come out today, Pound might go for further gains against Dollar, however we expect Pound to dip further against Dollar towards 1.44 area going ahead, in spite of larger correction.