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UK Manufacturing Disappointed; GBP Slides

Today, the UK Office of National Statistics showed that manufacturing contracted in May 2017. Manufacturing production fell 0.2% in May 2017 compared to April. It was also down 0.2% compared to May 2016. 


(courtesy of forexfactory.com)

The contraction was a surprise as economists anticipated a month-on-month increase of 0.5% instead of the -0.2% reading. The market reacted by selling the pound. Let's take a look at the pound against the euro.

EUR/GBP 1H Chart


(click to enlarge)

EUR/GBP rallied sharply after the manufacturing data disappointed. It looks poised to retest the 0.8880 high from June, and has upside towards 0.90, and eventually the 2016 high around 0.92.