Fall in UK manufacturing fans triple-dip fears
British manufacturing output fell in January at the fastest pace since June, reinforcing fears that the economy has tipped into its third recession since the 2008 financial crisis. The unexpected decline in manufacturing will put further pressure on Chancellor George Osborne to come up with measures to revive growth in his budget statement next week. The economy contracted in late 2012, leading to the loss of the UK’s prized triple-A credit rating, and Britain will be back in recession if economic activity shrinks this quarter. Although, data on the bigger services sector last week was more encouraging, showing the sector grew in February at its fastest pace in five months, according to a purchasing managers’ survey.
Euro-area industrial output fell more than economists forecast in January, adding to signs that the region’s recession extended into the first quarter. Factory production in the 17-nation euro zone dropped 0.4 percent from December, when it rose 0.9 percent, the European Union’s statistics office said today. The euro-region economy is struggling to regain momentum after five straight quarters of contraction, with unemployment at a record 11.9 percent. Industrial output in Germany, Europe’s largest economy, slipped 0.4 percent in January after a 0.8 percent gain in December, today’s report showed. France reported a decline of 1.2 percent, while Spanish output rose 0.6 percent.
On the FX Markets, GBP/USD settled the session sharply lower, with Sterling underperforming its peers following the release of less than impressive macroeconomic data from the UK. The underlying momentum remains in a bearish pattern and next technical support level is seen at 1.4687 which is the June 22nd 2010 low. Once broken, market participants will look to test the next major support at 1.4226 which is the May 2010 low. In an event that the bias reverses, technical level to keep an eye on it’s the March 7th high at 1.5100.