FX.co ★ The fundamental analysis of GBP/USD

Amid the released data, the industrial production in June increased by 0.5%, compared to the previous month and dropped by 11.1% in comparison with the same period of the last year and came to higher than experts expected. It was predicting that the industrial production would remain unchanged, compared to the reading in May and dropped by 12% in comparison with June, 2008. A monthly industrial production growth in June was the most significant from October, 2007.

Manufacturing Production increased by 0.4% in June, compared to the previous month and dropped by 11.7% in comparison with the same period of last year. A monthly growth of this indicator was the most significant from January, 2008. Economists predicted that the manufacturing production would remain unchanged, compared to the preceding month but in comparison with the reading of the last year it had been reduced by 11.4%.

Increase in production of vehicles in June conduced the growth of UK industrial production to the highest level per 20 months. Herewith, monthly figures of manufacturing production also were higher than economists\' expectations. This is the regular sign that the worst period of recession in UK economy had gone. The two — days meeting of the BoE on the monetary policy will be finished on Thursday, during which, as expected, the Central Bank increased the volume of bonds purchasing from the current level of GBP 125 bln. within country\'s program. The industrial production is extremly volatile and three months data are the best trend indicator, than month data. The industrial production reduced by 0,6% for the previous three month ended June, compared the the last period, when the production in manufacturing sector dropped by 0.2%.

On the back of this data the British pound grew reaching the sessional maximum levels against majors, as the state UK bonds lost gained positions. The pair pound/U. S. dollar increased by 40 points and renewed the maximum level of 2009 near 1,7006, which the pair reached on Tuesday, at the same time tha pair Euro/pound decreased to the intraday minimum of 0,847. Totally, the further investors behavior says about uncertainty in British pound growth, which is lately seen. the high correlation of the British currency with the stock market dynamics broadly explains its growth.

Best regards,

Analyst: Vladimir Donin.