Forex: GBP/USD – Recovering from three-year low

iNVEZZ.com Wednesday July 10th: The pound has rallied against the USD today since bottoming out at a three-year low of 1.4812. The recovery started before the European trading session got under way though the pair is currently down again at 1.4888.

Yesterday sterling softened on news of a contraction in UK manufacturing production of 0.8 percent in May, missing expectations for 0.3 percent growth. Year-on-year, the May contraction was 2.9 percent, worse than expectations for a 1.6 percent fall.
May industrial production came in unchanged in May, disappointing expectations for a 0.2 percent increase and 2.3 percent down y/y.

Adding to the gloomy news, the UK trade deficit widened to £8.49 billion in May from a deficit of £8.43 billion in April and slightly worse than expectations for a shortfall of £8.47 billion.
Meanwhile, demand for the US dollar increased after the International Monetary Fund lowered its global growth forecasts in its World Economic Outlook released yesterday.

The IMF now believes that the global economy will grow at 3.1 percent this year, the same as last year but down on its forecast of 3.3 percent from three months ago. The 2014 forecast was cut to 3.8 from four percent.
In the US, the minutes of the Federal Open Market Committee’s June 18-19 meeting will be released just after 21.00 BST. It was following that meeting that US Fed chairman Ben Bernanke strongly hinted of a ‘tapering’ of US fiscal stimulus from this coming September. The market will closely monitor Bernanke’s expected comments on the release of the minutes.
US economic releases to be published today include MBA Mortgage Applications, Wholesale Inventories and EIA Crude Oil Stocks change, all due out between 12:00 and 15:30 BST.