The UK economy continues to find itself under pressure despite the robust labour market, as Manufacturing Production m/m came in at -0.2% (0.1% exp). Industrial Production also took a hit as it slipped to -1.1% (-0.1% exp), so all in all it was a bad day for the UK economy and the outlook for its manufacturing sector. This however should not come as to much of a surprise given the slowdown in the global economy, and there has been a lot of pressure on the commodity sector in the UK economy which in turn will have driven figures lower.
Looking at the GBPUSD it was a case of being driven by the USD all together today, as the GBPUSD lifted despite the negative result. From a technical perspective it has however struggled to find any sort of bullish momentum as time and time again the 50 day moving average continues to act as dynamic resistance. Just above that is further resistance at 1.4590 and it's likely that even if there is a test through the 50 day moving average it will be stopped by the resistance level. For now though the USD is driving direction, but it's safe to say that for the GBPUSD the economic outlook continues to be negative and it would be surprising to see it rise higher until we see a turnaround in the markets.
Oil markets continue to cause havoc as despite the recent data out of the US oil inventories which showed a weak reading of -0.75M. Iran has also been more vocal about producing more and more oil and this has weighed heavily on the markets, especially as OPEC has no plans to taper production at all. Despite all of this the current oil prices are unsustainable in the long run, and eventually the market will look to find equilibrium - something which seems sometime off. Certainly the current price of a barrel at $27.00 is very cheap, but in the low 20's we will see very strong pain in the market and we could see some serious volatile market corrections.
Chart wise oil continues to be a mover and the bears are very much in control at present as it looks to slip lower and test support at 26.73, however the real support level to be tested continues to be at 24.74 and this will be an aggressive point for the market where we could see strong movements in both directions as the market will look to find some direction. Any lower than this level and we are entering uncharted territory and the market may struggle to make any further headwind lower.
Lastly, equity markets continue to be extremely volatile and traders should be aware of the opportunities that may arise in the market. Currently the S&P 500 is looking more and more volatile but there is a strong bullish trend line forming in the market playing of candle wick lows. With the current push lower it will be interesting to see if it can hold up, or fall further on global market pressure.
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