• UK Manufacturing Production Falls 2.9 Percent
• Analyst Predictions Beaten 
• All Eyes On BoE

Data out Tuesday showed that manufacturing production in the U.K. fell less than expected in the month of June.

The report from the Office for National Statistics said that production fell by a seasonally adjusted -2.9 percent, down from a rise of 1.2 percent in May. The figures beat forecasts of -4.1 percent.

Lovely Jubilee?

The slump - albeit less dramatic than expected - has been largely attributed to the extra public holidays to celebrate the Queen's 60-year Jubilee celebrations. Construction was the sector most affected by the extra holidays, with pharmaceutical, computer and machinery producers picking up the slack.

The depth of the downbeat forecasts ahead of the data release reflected faltering confidence in a return to health for the U.K economy over the summer months. Weakening business sentiment surveys and retail spending stats, combined with the U.K.'s latest plunge into recessionary territory have conspired to undermine confidence in a return to growth any time soon.

Concern Remains

June's figures may have emerged stronger-than-expected, but concern still lingers. “The bulk of the decline in June reflects the bank holiday effect, but the surveys suggest we are seeing an underlying slowdown in manufacturing,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. It’s a “pretty bleak picture with the euro-zone crisis rumbling in background. It’s going to be very hard for manufacturers to increase business.”

Ahead of the release, sterling stayed near a one-month low against the euro as investor fears about the extent of the decline continued to ravage sentiment. Talking ahead of the release, Richard Driver (pictured) of Caxton FX, said: "Sterling is pretty much out of favour across the board. It's looking really vulnerable and these weak figures just keep on coming. 

"We definitely could see the euro test 80 pence, though the figures would have to undershoot even these low expectations."