Bearish UK factory data sent sterling to its lowest level in three days against the dollar, and below the 200-day moving average against the yen. A surprise contraction in both industrial production and manufacturing in October drove cable to its overnight low of 1.2575 until support at Fibonacci retracement prevented further losses and provided a base for GBP/USD to grind up to 1.2620.
Sterling is unlikely to make any immediate progress above 1.2640, however, as the UK parliament votes today on the timetable for invoking Article 50, which sets in motion England’s separation from the European Union. Prime Minister Theresa May agreed to publish her plan for the divorce hoping to gain the support of her government. While the outcome of the vote is non-binding and the UK high court could demand the government pass formal legislation, sterling is at risk if May wins the votes of the Lower House.
The dollar is mostly lower against most of the other major currencies with the yen fractionally lower at 114.02, still orbiting the 114.00 level. EUR/USD barely moved off the 1.0720 level through both the Asian and European session and is starting the day 0.13% higher against the dollar. Thursday’s European Central Bank meeting, at which point the ECB is not expected to alter monetary policy, is keeping the euro in limbo and unlikely to make a move outside of 1.0700 and 1.0750 unless there is a surprise announcement from UK lawmakers regarding Article 50.