Punctually at 08:30 am GMT the first, important data from Europe appeared this week. The British Industrial Production report and its trade balance are astonishingly surprising.
The latest data from the ONS clearly indicate the large divergence of forecasts by market analysts with real production values in British factories. April data surprise with a decline in the growth rate of 1.4%, wherein March it recorded a cosmetic change of -0.1%. The dynamics of industrial production are also deteriorating - the index in April is down 0.8% on a monthly basis and a deterioration to 1.8% from 2.7% on yearly basis.
Office for National Statistics also reports a noticeably worse balance of international trade recorded in April by the British economy. The UK deficit is growing to GBP 14.04 billion after a loss of only GBP 12 billion in international trade in March. The UK deficit is also growing in settlements with countries outside the European Union - the value of the index amounted in April to GBP 5.37 billion against earlier GBP 3.79 billion.
Let's take a look at the GBP/USD technical picture at the H4 time frame. The first market reaction is in line with what we could expect from the disappointing values of the latest reports. the GBP/USD pair drops below 1.3400, creating new daily lows at the level of 1.3360. This level is very close to the technical support at 1.3353 and might be tested today as the market has fallen out of the golden channel and it looks like the lower prices are possible. The untested technical resistance is seen at the level of 1.3399 and only a sustained breakout above this level would change the short-term bias to bullish.