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UK industrial output rose indicating optimistic economic recovery

UK industrial output rose indicating optimistic economic recovery

The pound rose to a 1-1/2 month high against the dollar, after the UK industrial output data encouraged some cautious optimism that Britain might avoid a renewed recession. British industry recovered surprisingly strongly in February, signalling a promising economic recovery that may need more support from the central bank to gather pace. In January, industrial output rose by 1 percent, which lifted production in February – slightly above its average level in the last quarter of 2012. Meanwhile, a survey showed that FLS has been supporting Britain’s housing market as sales were at their highest level in three years and prices remained generally stable.

Whereas in the U.S., house prices are escalating too quickly relative to buyer incomes, indicating that property values may decline in some U.S. cities once mortgage rates rise and reduce affordability. For a 30-year fixed mortgage, the average rate fell to a record 3.31 percent in November, and was 3.54 percent last week.

On the FX markets, apart from benefiting from a weaker USD, GBP/USD was also supported by better than expected Industrial and Manufacturing production reports. The pair remains in a bearish pattern but there is a risk of a breakout above 1.5424. Once broken the upside target would be the 50% retracement at 1.5606.

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