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The British production output and manufacturing have continued to shrink in the three months to July showed an economic report released by the Office for National Statistics on Monday, which is unsurprisingly resulting from Brexit uncertainties as the deadline for the official departure continues to come closer.
According to the report, the production output has decreased by 0.5 per cent in the three months to July compared with the three-month period ending April 2019. Nevertheless, short-term data shows that the total output has increased marginally by 0.1 per cent in the month of July, which is an insufficient indication of stabilization of the economy. However, should production continue to rise, even if nominally, investors might be convinced that the Brexit woes are not as severe as previously thought.
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Manufacturing follows a similar pattern, where the overall manufacturing rate has tumbled by 1.1 per cent in the three months to July “because of widespread weakness with 11 of the 13 subsectors decreasing” [source]. Yet, the monthly manufacturing output “highlights a mixed picture of 7 of the 13 sectors rising”.
Meanwhile, manufacturing woes worldwide, chiefly in the manufacturing of cars, continue to worry investors, as the global tendency of deteriorating performance is starting to have a negative rippling effect in other aspects of the global economic output. Subdued investing rates and consumer spending are partially stemming from the reluctance exhibited by investors, which in turn is owing to these disappointing economic numbers.
The GBPUSD pair found strong support at 1.20320, which level has historical significance for the pair, as the last time it was broken was immediately following the Brexit vote in 2016. Thus, the pair has a chance to rebound at this crucial level, seeing as it is currently trading at 1.23650. Conversely, should the price break below the 1.20000 level, the next fundamentally important target would be the parity level at 1.0000, which could be targeted in the months following Britain’s divorce from the European Union.
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