Global macro overview for 11/08/2017:
The UK Industrial Production data beat the expectations. According to the UK government agency, the Industrial Production for the month of June has been released at the level of 0.5% after a revised reading of no change for May and was above consensus expectations of a 0.1% increase for the month. Moreover, on a yearly basis, the Industrial Production increased from -0.2% to 0.3%. Manufacturing output was unchanged in June which was in line with consensus forecast to give a year-on-year increase of 0.6%. The biggest weakness was noted in the transport section and it was at the level of 2.2% m/m. Every 0.4% contraction in production for a quarter will result in 0.3% GDP decrease, but this time the impact on the revised GDP reading will be minimal.
Other UK data releases were disappointing with a 0.1% decline in construction output compared with an expected increase of 1.2% and the trade deficit was higher than expected as exports fell sharply. This situation might increase concerns surrounding the overall outlook, especially as the industrial sector has been supported by British Pound overall weakness.In the age of the global competitiveness, the UK industrial sector should be experiencing a robust growth if it wants to stay in a top performers league, especially after the Brexit negotiations will end. The British Prime Minister Theresa May reiterated yesterday, that the overall negotiations with the EU, including the process of soft or hard Brexit, will take at least two years, so the UK economy still has the time to improve.
Let's now take a look at the GBP/USD technical picture at the H4 timeframe. After the failure at the level of 1.3270, the British Pound is clearly weakening and currently is approaching important technical support at the level of 1.2932. Despite the oversold market conditions, the momentum indicator can not move above its fifty level, which supports the bearish outlook.
