EUR/GBP manages to defend 0.87 handle on mixed UK data

   •  UK manufacturing/industrial productions fall short of expectations.
   •  UK trade deficit shrinks more than expected and supports GBP.

The EUR/GBP cross managed to find some support near the 0.8700 handle and recovered part of its early lost ground post-UK economic data. 

The British Pound lost some ground after the latest UK manufacturing production fell short of consensus estimates and unexpectedly contracted by 0.2% in February, as against a growth of 0.2% expected, with yearly growth at 2.5% as compared to 2.2% previous but lower than 3.3% anticipated. Adding to this, the overall industrial production also missed estimates and recorded a tepid m-o-m growth of 0.1% during the reported period. 

The negative production data, to a larger extent, was negated by narrowing UK goods trade balance, coming in to show a deficit of £10.2 billion as against £11.95 billion expected and £12.23 billion previous, and did little to assist the cross to breakthrough previous session's broader trading range. 

Meanwhile, the shared currency remains underpinned by yesterday's hawkish comments by the ECB Governing Council member Ewald Nowotny, saying that the European Central Bank would end its bond-buying program by the end of this year, and might continue to limit further downside. 

Technical levels to watch

Any meaningful recovery attempt is likely to confront some fresh supply near the 0.8725 region, above which a bout of short-covering could lift the cross further towards mid-0.8700s. On the flip side, sustained weakness below the 0.8700 handle is likely to accelerate the slide back towards the 0.8670-65 region, multi-month lows touched in March.