GBP to Euro surges beyond 1.21 to reach one-month high on production data, forecast to go higher

The GBP to Euro surged on Tuesday to push beyond the 1.21 level and climb close to its highest-level in a month following the release of better-than-expected industrial and manufacturing production data.

According to the Office for National Statistics, UK industrial production increased more than economists had forecast in February as the sector was boosted from a surge in factory output, giving further support to the UK’s economic recovery.

Production climbed by 0.9% from January’s level and beat economist forecasts for growth of 0.3%. Year-on-year industrial output rose by 2.7%. The increase is the biggest since June last year.

Manufacturing output smashed economist forecasts by making its biggest increase since September last year. Output surged by 1% in February smashing economist forecasts for a month-on-month rise of 0.3%. On a yearly basis, manufacturing increased by 3.8% beating forecasts for a figure of 3.1%.

The Pound received further support from a separate report released by the British Chambers of Commerce which showed that six key manufacturing balances hit all time high in the first quarter of 2014 and that service sector was performing strongly as well.

Today’s report takes some of the edge off of the recent disappointing PMI reports which suggested that the UK’s factory sector saw its slowest rate of growth in eight months.

Against the US Dollar the Pound climbed to its highest level since early March. Sterling also advanced against the Swiss Franc and many other peers. It also regained some ground against the Australian and New Zealand Dollars.

Investors will now be looking ahead to tomorrow’s UK balance of trade data and Thursday’s Bank of England interest rate decision.