UK manufacturing production for July rose by 0.2%, failing to hit analysts' expectations for a reading of 0.3%. The UK has had a strong run of economic data recently, with manufacturing, services and the construction purchasing managers indices (PMI) all exceeding estimates. Disappointed traders sold the pound after this morning’s industrial production report failed to deliver the stronger figure anticipated.
Volatility has been low this morning, as traders sit on the fence ahead of the non-farm payrolls and US unemployment announcement at 1.30pm. The market consensus is for a rise of 180,000 new jobs on the payroll, and for unemployment to remain at 7.4%. The unemployment rate is the one traders will be watching. The Federal Reserve is currently running a bond-buying programme of $85 billion per month, but Ben Bernanke has stated the package will be reduced when the jobless rate declines. If the US reports a drop in unemployment, traders may be prompted to sell GBP/USD in anticipation of the Fed tapering its stimulus package sooner rather than later.