• Upbeat UK manufacturing data which is much higher than expectation favors the British pound.
• Brexit referendum vote supports the pound to edge higher against the greenback.
• US dollar is under pressure due to some of the less hawkish by Fed Powell.

Sterling traded high against the greenback on Friday after robust UK economic data and the day after Brexit referendum vote.

The industrial sector of UK witnessed a solid recovery in November, which is evident from the the latest UK industrial and manufacturing production data published by Office for National Statistics (ONS) on Friday.

Manufacturing output arrived at 1.1% MoM in November versus 0.2% expectations and much higher than 0.1% recorded in October while total industrial output came in at 0.7% vs. 0.2% expected and -0.5%.

On a annual basis, the UK manufacturing production reading came in at 0.4% in November, beating expectations of -0.3%. Total industrial output rose by 0.1% in November month against a 0.5% reading expected and the previous 0.2% print.

Elsewhere, the UK goods trade balance numbers were published, which arrived at GBP-11.337 billion in November versus GBP-14.20 billion expectations and GBP-13.93 billion last. 

As per the Statistca Research Department, “As of January 2022, 49 percent of people in Great Britain thought that it was wrong to leave the European Union, compared with 38 percent who thought it was the right decision. During this time period, the share of people who regret Brexit has been slightly higher than those who support it, except for some polls in Spring 2021, which showed higher levels of support for Brexit. The share of people who don’t know whether Brexit was the right or wrong decision has generally been consistent and usually ranged between 11 and 13 percent.”

The pound has also being supported by by expectations of rate hikes by the Bank of England this year.

Meanwhile, the US dollar is under pressure due to some of the less hawkish comments of late, including both the Federal Reserve chair, Jerome Powell, and Philly Fed President Patrick Harker.

On Thursday, Harker said “he sees the Fed starting to shrink its balance sheet “in late 2022 or early 2023” after the central bank has raised its target rate sufficiently, to around 1 per cent from near zero.” ”We’re going to end our asset purchases in March, meaning we’ll be raising rates over the course of the year,” Powell said on Tuesday at his confirmation hearing before the Senate Banking Committee.

GPB/USD 4 Hour Chart:

Support: 1.3684 (S1), 1.3665 (S2), 1.3633 (S3).

Resistance: 1.3734 (R1), 1.3766 (R2), 1.3784 (R3).

Amidst all the catalysts favoring the British pound, we expect a bullish trend for GBP/USD.