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 due for release alongside the releases of the Kingdom’s Trade Balance and Industrial Production, all of which will drop parallelly later on Tuesday at 0600 GMT.
The UK GDP is expected to arrive at +0.6% MoM in February while the Index of Services (3M/3M) was reported at -2.4%. in January.
Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to drop by 0.8% MoM in February vs. -2.3% recorded in January. The total industrial production is expected to come in at +0.5% MoM in Feb as compared to the previous reading of -1.5%.
On an annualized basis, the industrial production for Feb is expected to have dropped by 4.4% versus -4.9% previous while the manufacturing output is also anticipated to have declined by 5.1% in the reported month versus -5.2% last.
Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £10.60 billion in Feb vs. £9.826 billion deficit reported in Jan.
How could affect GBP/USD?
At the press time, the GBP/USD is under pressure, testing lows near 1.3725, as the attention turns towards the critical UK macro releases.
Although the major remains underpinned by the optimism surrounding the UK re-opening from the covid-induced lockdown restrictions, the broad US dollar comeback alongside the Treasury yields appears to be weighing on the cable.
FXStreet’s Chief Analyst. Valeria Bednarik explains: “The bullish potential remains limited, according to the 4-hour chart, as technical indicators were unable to enter positive levels, easing from neutral readings. The pair is currently developing a few pips above a bearish 20 SMA, but below the longer ones, with the 100 SMA providing dynamic resistance around 1.3790. As long as the pair holds below the level, the risk is skewed to the downside.”
Key notes
GBP/USD struggles below 1.3750 amid USD comeback
EUR/GBP outlook: Bulls pause under massive daily cloud ahead of UK GDP
GBP/USD now seen within 1.3670 and 1.3810 – UOB
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.
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