Pound lifted after unexpected rise in UK industrial output

Sterling was lifted higher after some surprisingly better UK data. Industrial output was higher in March defying expectations for a fall. According to data from the UK Office for National Statistics, IP rose 0.5% versus 0.0% expected from a previous 0.1%. This was the fastest rate in six months, since September.

When the data came out at 9:30 am London time, the pound jumped from $1.5574 to $1.5609 and continued rising to $1.5692 by 10:50 am.

Contributing to the rise in the data was a recovery in oil prices. Economists had expected the lower output from the North Sea’s oil and gas terminals to weigh down the figures, but instead there was a month-on-month rise of 4.9$ in oil and gas extraction in March, the fastest rate for over a year thanks to the bounce in oil prices.

Meanwhile, strong rises in pharmaceuticals also helped the data improve as this sector was up 6.7% month on month, in computer, electronic and optical equipment, up 1% month on month, and textiles, clothes and leather, also up 1% month on month.

The data was a relief to markets since there was some concern recently that the UK manufacturing recovery was slowing. Last month, the CBI warned that the speed of Britain’s manufacturing recovery has slowed and companies are concerned about their competitiveness in the Eurozone.

According to the CBI’s quarterly survey, output growth had fallen to its lowest level since January 2013 and investment intentions were also down sharply.

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