Sterling strengthens after upbeat UK industrial production data

Sterling strengthened against the dollar and versus the euro after data on Wednesday showed UK industrial output had recovered better than expected from a July slump.
Industrial production growth beat forecasts in both monthly and annual terms.

Overall industrial output, which includes Britain’s oil and gas sector, rose 1.0 percent in August compared with July, leaving production 1.9 percent higher than a year earlier.

Meanwhile, manufacturing rose by a monthly 0.5 percent, above economists’ average forecast of a 0.3 percent rise. It had plunged by 0.7 percent in July, when output was hit by earlier than usual summer shutdowns of car plants. But compared with August last year, manufacturing output was down 0.8 percent.

The pound surged against the dollar to its highest in more than two weeks after the data to back above $1.53 for the first time since September 23.

The pound also gained versus the euro, hitting a 10-day high of 73.43 pence per euro immediately after the data.

UK government bond futures extended losses by around 10 ticks after the data and 10-year gilt yields gained to their highest since September 25 at 1.850 percent, 5 basis points up on the day.

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