EUR/GBP receives downward traction after improved UK production data, trades below 0.8590

• EUR/GBP faces challenges on improved production data from the United Kingdom.
• UK Manufacturing Output MoM rose by 0.4%. While Manufacturing Production YoY increased by 1.3% in November.
• ECB President Christine Lagarde’s dovish remarks contributed to the downward pressure on the Euro.

EUR/GBP continues to move on a downward trajectory for the second successive session, trading near 0.8590 during the early European session on Friday. The EUR/GBP pair loses ground on improved production data from the United Kingdom (UK).

United Kingdom’s (UK) industrial sector activity rebounded in November. Office for National Statistics (ONS) on Friday, revealed that Manufacturing Output rose by 0.4% MoM in November versus 0.3% expected, swinging from the previous decline of 1.2%. Total Industrial Production (MoM) remained consistent at 0.3% as expected against the previous decline of 1.3%. Meanwhile, the annual UK Manufacturing Production increased by 1.3% in November, missing expectations of 1.7%. Total Industrial Output declined by 0.1% in the same period, as against the 0.7% estimated growth and the previous print of -0.5%.

However, the UK Total Trade Balance for November showed a deficit of GBP14.189B versus GBP15.70B expectations and GBP15.936M prior. UK labor market data will be eyed by the traders on Tuesday.

On the other side, the Euro has suffered losses possibly due to remarks made by European Central Bank (ECB) President Christine Lagarde on Thursday. Lagarde stated that the most challenging phase was likely behind, and interest rates would be reduced if the ECB had a certainty that inflation had declined to the 2.0% level. Lagarde also added that interest rates in the eurozone had reached their peak after a rapid increase in response to high inflation last year.

November’s Industrial Production data for the Eurozone’s manufacturing sector is scheduled to be released on Monday. The focus will be shifted to German and European Monetary Union Consumer Inflation data on Tuesday and Wednesday, respectively.