UK data released at the London session showed some impact of the Olympics. While both UK Goods and non-EU trade balances moved from deficit (£-7.149B and £-2.877B, respectively) to surplus (£9.844B and £4.972B, respectively) in August, and against deficit widening expectations, the Total Trade Balance changed from £1.517B surplus to £4.169B deficit, more than the expected £-2.550B.
The annualized UK Industrial Production contracted further from -0.8% to -1.2% in August, with a monthly -0.5% decline as expected. Manufacturing production shows a big annualized change, from +3.2% to -1.2%, with a monthly -1.2% contraction.
The BoE's Governor Mervyn King will speak today at 17:30 GMT. “The GBP/USD came under increasing downside pressure yesterday and will shortly encounter the 38.2% retracement support at 1.5995”, wrote Commerzbank analyst Karen Jones, pointing to resistance at 1.6221 and risk for a slide back to the 1.5912/00 zone (50% retracement of the move up from July and also the 23rd August high).