UK GDP grows by 0.3% MoM in November vs. 0.1% expected
The UK economy grew in November, with the Gross Domestic Product (GDP) rising by 0.3% following a 0.1% drop reported in October, the latest data published by the Office for National Statistics (ONS) showed on Thursday.
The market forecast was for a 0.1% increase in the same period.
More to come...
This section below was published at 5:05 GMT on Thursday as a preview of the UK GDP and Industrial data releases.
UK GDP, Industrial Production Data Overview
The United Kingdom (UK) docket has the Gross Domestic Product (GDP) and Industrial Production data for November to be released by the Office for National Statistics (ONS) on Thursday, later this session at 07:00 GMT.
UK Gross Domestic Product is expected to increase by 0.1% month-over-month (MoM) in November, swinging from the 0.1% decline in October.
UK Industrial Production may rise 0.1% MoM in November, following 1.1% increase in October. Meanwhile, the annual production could fall 0.4% in the same month, following a 0.8% decrease prior.
How could UK GDP, Industrial Production data affect GBP/USD?
GBP/USD may halt its losses if UK GDP and Industrial Production data meet expectations, shaping market views on the Bank of England’s (BoE) policy outlook. Any downside surprises would add to selling pressure on the Pound Sterling (GBP) against its major peers. Monthly Manufacturing Production will also be closely watched.
The GBP/USD pair remains under pressure as the US Dollar strengthens after stronger-than-expected United States (US) Producer Price Index (PPI) and Retail Sales data, along with last week’s lower Unemployment Rate, reinforced expectations that the US Federal Reserve will keep interest rates on hold in the coming months. Traders will also watch the weekly US Initial Jobless Claims data later in the day.
Technically, GBP/USD edges lower, trading around 1.3420 at the time of writing. The momentum indicator 14-day Relative Strength Index (RSI) is at 50 (neutral) after retreating from overbought readings, indicating balanced momentum. The immediate resistance lies at the nine-day EMA of 1.3444. A daily close back above the short-term average could open a path toward the three-month high of 1.3562. The primary support lies at the 50-day EMA of 1.3387. A daily close under the medium-term average would open the doors for the pair to navigate the region around the eight-month low of 1.3010.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
