The Pound should have received a big boost last week from the release of resoundingly positive manufacturing production and construction output figures for the end of 2016. However, even though Sterling did spike to around 1.25 from 1.24 against the US Dollar and gained half a cent against the Euro, traders failed to follow through and further strengthen the Pound before the weekend. The FTSE 100 in London responded well to the results, rising 0.34%.
The Office for National Statistics (ONS) released a report on Friday, 10th February, 2017, showing that manufacturing production grew by 2.1% in December 2016 (seasonally adjusted), well above the forecast 0.5% growth and a noticeable improvement on the previous month’s figure of 1.4%.
Manufacturing production was up by 4.0%, smashing expectations of just 1.8%, following the result of 1.7% in November 2016. Industrial production also grew 1.1% (seasonally adjusted), an increase on the 0.2% prediction. The report shows annual growth of industrial production of 4.3%, exceeding expectations of 3.2% and almost double the 2.2% growth seen in the previous month’s comparisons.
This follows the release of the positive Markit Manufacturing Purchasing Managers’ Index (PMI) results for January 2017, at 55.9. This report also showed that new orders were up considerably at two and a half year highs, rising at the quickest rate for three years.
“It’s a case of good news all round,” commented David Johnson, Director at Halo Financial. “Last week’s PMI figures failed to move the Pound, but confirmation that UK industry is thriving and showing significant growth was just the boost that Sterling needed. Results like this are an antidote to the naysayers who have previously written off the UK economy, and provide some welcome reassurances about the UK’s future as Brexit unfolds. However, currency traders need to start believing the positive news will continue after Article 50 is triggered before we see Sterling reflect the encouraging data.”