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, alongside the trade balance and industrial production, all of which will be published later this session at 0930 GMT.

The United Kingdom GDP is expected to arrive at 0.2% m/m in January versus -0.4% booked in December.

Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to arrive at 0.0% m/m in January, up from a contraction of 0.7% recorded in December. The total industrial production is expected to come in at 0.0% m/m in Jan as compared to the previous reading of -0.5%.

On an annualized basis, the industrial production for Jan is expected to have dropped 1.4% versus -0.9% previous, while the manufacturing output is also anticipated to have dropped 2.0% in the reported month versus -2.1% last.

Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £12.20 billion in Jan vs. £12.10 billion deficit reported in December.

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 affect GBP/USD?

A negative surprise in the UK GDP figures could trigger fresh GBP selling across the board, but the reaction to the data dump is expected to be short-lived, as the Brexit-related developments will remain the main driver.

Haresh Menghani, FXStreet’s Analyst notes: “Any subsequent retracement is likely to find immediate support near the 1.3180-70 region, which if broken should prompt some fresh technical selling and accelerate the slide further towards the 1.3100 round figure mark. A follow-through selling below 1.3070-65 horizontal zone might turn the pair vulnerable to head back towards challenging the key 1.30 psychological mark.” 

“On the flip side, the 1.3255-60 region now seems to act as an immediate resistance and is followed by the 1.3300 handle, above which the pair seems all set to surpass recent multi-month tops, around mid-1.3300s, and aim towards reclaiming the 1.3400 mark for the first time since June 2018,” Haresh adds.

Key Notes

Brexit and US CPI amongst market movers today – Danske Bank

New Brexit concessions unlikely to be enough to get the deal over the finish line

GBP futures: rising odds for a move higher

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.