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

The UK Economic Data Overview

The British economic calendar is all set to entertain the cable traders during the dull hours of early Friday, at 06:00 GMT with April GDP figures for 2021. Also increasing the importance of that time are Trade Balance and Industrial Production details for the stated period.

Having witnessed a 2.1% run-up of economic activities in the previous month, market players will be interested in April’s monthly GDP figures to confirm the economic transition. Also highlighting the importance of the data is the easing of the national lockdown and related economic impacts.

Forecasts suggest that the UK GDP will rise 2.4% MoM in April versus +2.1% prior. GBP/USD traders also eye Index of Services (3M/3M) for the same period, -2.0% prior, for further insight.

Meanwhile, Manufacturing Production, which makes up around 80% of total industrial production, is expected to drop from +2.1% to +1.5% MoM in January. Further, the total Industrial Production is expected to come in at +1.2% MoM versus the previous reading of +1.8%.

Considering the yearly figures, the Industrial Production for Apri is expected to have jumped by 30.5% versus +3.6% previous while the Manufacturing Production is also anticipated to have declined by 41.8% in the reported month versus 4.8% last.

Separately, the UK Goods Trade Balance will be reported at the same time and is expected to show a deficit of £12.1 billion versus an £11.71 billion deficit reported in March.

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 over 60-70 pips.

How could affect GBP/USD?

GBP/USD struggles for a clear direction while taking rounds to 1.4170 during early Friday. In doing so, the cable seeks more clues to extend the previous day’s recovery moves from the weekly low. The pair’s sluggish moves could also be linked to the cautious sentiment ahead of the Group of Seven (G7) meeting the in the UK as well as fresh chatters over a push to the unlock deadline of June 21. Furthermore, the EU-UK Brexit discussions at the G7 add filters to the quote’s moves.

Moving on, the UK data will offer additional clues to the tapering chatters but are less likely to move the GBP/USD much as the markets are more interested in Brexit and the covid headlines of late. Even so, upbeat data could propel towards breaking the 1.4200 immediate hurdle.

Ahead of the release, TD Securities said,

We look for another strong monthly GDP increase in April of 2.1% m/m, though that does leave us below the consensus of 2.35%. In mid-April, we saw non-essential retail, outdoor hospitality, and self-catering accommodation reopen. We already know that retail sales posted a huge 9.2% gain that month, leaving the level of sales 3.6% above the prior all-time high set in October 2020. And despite the fairly miserable weather through much of the spring so far, we think that hospitality will have still made a large contribution as people were eager to meet up and socialize. On the back of a 2.1% increase in March, this would leave a very strong hand-off for Q2 GDP growth, which we're currently tracking at around 4.5% q/q.

Technically, the monthly falling trend line near 1.4180 acts as an immediate hurdle for GBP/USD prices before highlighting a downward sloping trend line from May 21, at the 1.4200 threshold. Additionally, 1.4220 and the recent multi-month top near 1.4250 act as extra filters to the north. Meanwhile, 21-day EMA restricts the short-term downside of GBP/USD to around 1.4130-25.

Key notes

GBP/USD looks shy of regaining 1.4200, Brexit, UK data dump eyed 

GBP/USD Forecast: Recovery from critical support, 1.4200 caps

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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