When are the UK data releases and how could they affect GBP/USD?

The UK economic data overview

The UK docket has the monthly GDP release today, alongside the releases of the Kingdom’s Trade Balance and Industrial Production, all of which will drop in at once later in Europe at 0830 GMT.

The UK GDP is expected to arrive at +0.1% m/m in July while the Index of Services (3M/3M) for June stood at +0.1%.

Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to show m/m decrease of 0.1% in July vs. a drop of 0.2% recorded in June. The total industrial production is expected to come in at -0.1% m/m in July as compared to the previous reading of -0.1%.

On an annualized basis, the industrial production for July is expected to have dropped 1.1% versus -0.6% previous, while the manufacturing output is also anticipated to have declined 1.0% in the reported month versus -1.4% last.

Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £9.550 billion in July vs. £7.009 billion deficit reported in June.

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined around 20-pips in deviations up to + or -2, although in some cases, if notable enough, a deviation can fuel movements in excess of 60-70 pips.

How could they affect GBP/USD?

A disappointing UK GDP report could offer fresh impetus to the GBP bears, as Brexit/ UK political uncertainty continues to loom.

Haresh Menghani, FXStreet’s Analyst notes: “From a technical perspective, the near-term bias remains tilted in favor of bullish traders and support prospects for some dip-buying interest near a short-term descending trend-line resistance breakpoint, now turned support near the 1.2220 region. This is closely followed by the 1.2200 round figure mark.”

“On the flip side, the 1.2300 handle now seems to act as immediate resistance and is closely followed by the 1.2320 region, above which the pair seems all set to aim towards the 1.2400 round figure mark. A follow-through buying will reaffirm the bullish bias and pave the way for a further near-term appreciating move for the major,” Haresh adds.

Key Notes

All eyes on Brexit and UK GDP today – Danske Bank

GBP Futures: bearish with caution

Forex Today: China stimulus hopes buoy risk ahead of UK GDP, Brexit showdown

About the UK Economic Data

The Gross Domestic Product released by the Office for National Statistics (ONS) is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity. Generally speaking, a rising trend has a positive effect on the GBP, while a falling trend is seen as negative (or bearish).

The Manufacturing Production released by the Office for National Statistics (ONS) measures the manufacturing output. Manufacturing Production is significant as a short-term indicator of the strength of UK manufacturing activity that dominates a large part of total GDP. A high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or bearish).

The trade balance released by the Office for National Statistics (ONS) is a balance between exports and imports of goods. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the GBP.