UK manufacturing production preview: What to expect of GBP/USD?

The GBP/USD pair accelerates to the downside in the European session, after the recovery faltered just short of 1.30 handle. The major continues to remain weighed by dovish comments from BOE policymaker McCafferty delivered earlier on the day.

At the time of writing, the cable retreated slightly from  daily lows struck at 1.2968 and now hovers around 1.2980 levels, still down -0.43% on the day.

Focus now shifts to the UK industrial and manufacturing output figure for the month of July, scheduled for release at 08.30 GMT later in the European session.

Industrial & Manufacturing Production likely to recover in June

The manufacturing production, which makes up around 80% of total industrial production, is expected to show no growth in June, although would stage a recovery from a drop to -0.5% seen in May. Meanwhile, the total industrial production is predicted to reduce its pace of decline, and is expected to fall -0.1%% m/m in June, as compared to a -0.5% loss recorded in the previous month.

Today's release will reflect the second straight month of deceleration in the UK industrial figures, with the economy still suffering from the Brexit fallout. On a downside surprise, GBP/USD could fall further towards 1.29 handle, while if the data matches or batters expectations, we could see another recovery attempt in the major back beyond 1.30 handle.

GBP/USD technical levels to watch

Haresh Menghani, Analyst at FXStreet noted, “From current levels, 1.3035-40 level seems to act as immediate resistance and any recovery beyond this immediate resistance now seems to be capped at 1.3080-60 support-break point, now turned strong resistance.”

“Meanwhile on the downside, 1.2960 seems to provide some immediate support. However, given the confirmation of a near-term breakdown, the downslide seems more likely to get extended towards testing a very important support near 1.2850 region in the near-term.”