Forex - GBP/USD dips as market applauds U.S. industrial output data

The pound edged lower against the dollar on Monday after official data revealed activity in U.S. factories, mines and utilities was stronger in September than many were guessing.

In U.S. trading on Monday, GBP/USD was trading at 1.6158, down 0.06%, up from a session low of 1.6125 and off from a high of 1.6208.

Cable was likely to find support at 1.6116, Tuesday's low, and resistance at 1.6247, Friday's high.

The Federal Reserve reported on Monday that U.S. industrial production rose by a 0.6% last month, above expectations for a 0.4% rise and the fastest increase in seven months. 

The news gave the dollar some support, though investors remained cautious ahead of the Fed's upcoming policy meeting later in the week.

A string of disappointing economic reports has cemented expectations that the central bank will maintain the current pace of its USD85 billion in monthly asset purchases into early next year.

Asset purchases aim to spur recovery by driving down long-term borrowing costs, weakening the dollar in the process.

Still, the upbeat industrial output number gave investors some hope that sooner or later, the Fed will begin to taper the pace of its stimulus program, which would give the dollar support afterwards. 

Elsewhere, industry data revealed that U.S. pending home sales fell 5.6% last month, down for the fourth consecutive month and well below market calls for a gain of 0.1%, which capped the dollar's advance somewhat.

Meanwhile in the U.K., Bank of England policymaker David Miles said Monday that raising interest rates before there was a “meaningful” reduction in the unemployment rate would be "pretty catastrophic," which softened the pound.

Elsewhere, the pair shrugged off a Confederation of British Industry report that found just 2% of retailers reported an increase in sales in October, down from 34% in September. 

The pound, meanwhile, was down against the euro and up against the yen, with EUR/GBP up 0.08% at 0.8545 and GBP/JPY up 0.18% at 157.76.

On Tuesday, the U.K. is to publish data on net lending to individuals.

The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish data on producer price inflation and a report on consumer confidence, a leading economic indicator.