When is the UK Q3 GDP and how could it affect GBPUSD?

The UK Economic Data Overview

The British economic calendar is all set to entertain the Cable traders in early Friday, at 07:00 GMT, with the preliminary Gross Domestic Product (GDP) figures for the third quarter (Q3) of 2022. Also increasing the importance of that time are monthly GDP figures for September, Trade Balance, Manufacturing Production and Industrial Production details for the stated period.

Having witnessed a 4.4% YoY jump in economic activities during the previous quarter, market players will be interested in the first estimation of the Q3 GDP figures, expected 2.1% YoY, to back the BOE’s rate hikes. More interestingly, the QoQ figures are expected to turn negative with -0.5% expected versus 0.2% prior.

On the other hand, the GBPUSD traders also eye the Index of Services (3M/3M) for the same period, bearing forecasts of 0.5% versus -0.1% prior, for further insight.

Meanwhile, Manufacturing Production, which makes up around 80% of total industrial production, is expected to ease to -0.4% MoM in September versus -1.6% prior. Further, the total Industrial Production is expected to recover from the previous contraction of -1.8% to a -0.2% MoM for the said month.

Considering the yearly figures, the Industrial Production for September is expected to have improved to -4.3% versus -5.2% previous while the Manufacturing Production is also anticipated to have weakened to 6.6% in the reported month versus 6.7% the last.

Separately, the UK Goods Trade Balance will be reported at the same time and is expected to show a deficit of £18.75 billion versus a £19.257 billion deficit reported in the last month.

How could affect GBP/USD?

GBP/USD picks up bids to refresh a two-month high near 1.1730 ahead of the key UK GDP data on early Friday morning in Europe. The pair’s latest run-up could be linked to the market’s activity as European traders prepare to react to the previous day’s US inflation-led optimism. On the same line are optimism surrounding the UK’s new government’s ability as Prime Minister (PM) Rishi Sunak meets with representatives of European and Northern Ireland and conveys pleasure over the progress. Furthermore, headlines from the Bank of England (BOE), suggesting the British central bank’s plan to sell gilts, also favor the pair buyers.

That said, UK Q3 GDP bears downbeat forecasts and chatters over the Bank of England’s (BOE) easy rate hikes are on the table, which in turn challenges the GBPUSD pair traders while keeping it on the bull’s radar, mainly due to the market’s optimism.

Hence, downbeat prints of the UK Q3 GDP could probe the GBPUSD buyers for a while, unless being too extreme, whereas a positive surprise might enable the Cable pair buyers to overcome the immediate 1.1740 hurdle.

While considering this, FXStreet’s  Dhwani Mehta said,

The reaction to the data could be short-lived in the aftermath of the US inflation data and holiday-thinned light trading in the United States.

Ahead of the release, Westpac said,

The first estimate of Q3 GDP will mark the first quarter of negative growth that is likely to be sustained for the period ahead (market f/c: -0.5%). The trade deficit is also set to remain wide in September (market f/c: £7bn).

Key notes

GBP/USD Price Analysis: Bears are moving in but 1.1800 and then 1.2000 could be over the horizon 

GBPUSD marches towards two-month high at 1.1740 amid euphoric market mood, UK GDP eyed

UK GDP Preview: Barrelling toward recession. Pound Sterling set to fall?

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 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.