GBP/USD on session highs on UK manufacturing production report

The British pound reached its highest point during Tuesday trade against the US dollar, after a report showed that manufacturing production in the United Kingdom increased considerably more than projected in June.

GBP/USD touched a session high at 1.5391 at 8:30 GMT, after which consolidation followed at 1.5378. Support was likely to be received at current session low, 1.5332, while resistance was to be encountered at July 29th high, 1.5412.

Earlier today the Office for National Statistics in the United Kingdom said that manufacturing production increased significantly above projections in June, fueling hopes over economic outlook in the country. Manufacturing production rose by 1.9% in June on a monthly basis, outstripping preliminary estimates of a 1.0% increase. In May the value of the indicator was revised up to a 0.7% drop from a 0.8% drop previously. Annually, manufacturing production rose by 2.0% in June, far exceeding projections of a 1.0% rise, after the registered drop by 2.9% in May.

Additionally, the industrial production index in the UK rose by 1.1% in June on a monthly basis and by 1.2% on annual basis, beating expectations. In May the indicator remained unchanged compared to April, while compared to May 2012, it recorded a 2.9% drop.

It also became clear that British retail sales increased by 3.9% in July annually, supported by the warm weather and Andy Murrays victory at Wimbledon, according to a report by the British Retail Consortium (BRC). On a monthly basis sales increased by 2.2% in July, following the 1.4% increase in June. This was the fastest rate of monthly increase since July 2006. At the same time, online retail sales slowed down in July, increasing by 7.9% annually, which was an almost 50% weaker result in comparison with July 2012, when retail sales soared 15.6%.

Good outlook for economy was supported additionally, after Markit Economics and the Chartered Institute of Purchasing and Supply reported on Monday that Services PMI in the United Kingdom hit a reading of 60.2 in July, as that was the highest pace for 6.5 years.

Meanwhile, the greenback received support on Monday, after the Institute for Supply Management (ISM) said that the index of activity in the sector of services in the United States rose to a reading of 56.0 in July, reaching a five-month high, significantly above estimates of a value of 53.1.

The pound was trading higher against the euro, as EUR/GBP cross inched down 0.05% to reach 0.8630. German factory orders during June were due to be released in minutes.