Investing.com - The pound pushed higher against the dollar on Wednesday as overall market sentiment improved, but gains were held in check after data showing that U.K. industrial output fell by the most since September 2012 in December.
GBP/USD was up 0.22% to 1.4503 from around 1.4461 ahead of the data.
The Office for National Statistics said industrial output fell 1.1% in December after a 0.8% drop in November. Economists had forecast a more modest 0.1% decline.
The large fall was due in large part to a 4.6% decline in oil and gas extraction and a 4% drop in mining.
Manufacturing output fell 0.2% after dropping 0.3% in December. Economists had expected manufacturing output to edge up 0.1%.
On a year-over-year basis manufacturing output was down 1.7%.
The data added to fears that the U.K. economy lost momentum at the end of 2015.
But the pound shrugged off the data as gains in European stock markets bolstered risk appetite.
London’s FTSE 100 was up more than 1% as European markets snapped three sessions of losses, with the banking sector bouncing back after slumping since the start of the week on concerns over the health of the sector and the global economy.
Global markets have been hard hit by a combination of fears over slowing global growth, more widespread use of negative interest rates and a prolonged depression in the commodity sector.
Sterling was higher against the euro, with EUR/GBP down 0.51% to 0.7764.
The low-yielding euro was also weaker against the dollar, with EUR/GBP down 0.36% to 1.1252, after hitting three-and-a-half month highs of 1.1338 on Tuesday.
Meanwhile the dollar pulled back from 15-month lows against the safe haven yen, with USD/JPY last at 115.00.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.21% to 96.24, off Tuesday’s three-and-a-half month lows of 95.68.
Investors were looking ahead to testimony by Federal Reserve Chair Janet Yellen later in the day for further clarity on the path of U.S. rate hikes this year in the wake of recent mixed economic reports.