When are the UK data releases and how could they affect GBP/USD?
The UK Economic Data Overview
The UK docket has the monthly and the second quarter GDP releases today, alongside the releases of the Kingdom’s Trade Balance and Industrial Production, all of which will drop in at once later in Europe at 0830 GMT.
The United Kingdom GDP is expected to arrive at +0.1% m/m in June while the first readout of the Q2 GDP is seen at 0.0% q/q and +1.4% y/y.
Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to show m/m decrease of 0.1% in June, down from a growth of 1.4% recorded in May. The total industrial production is expected to come in at -0.2% m/m in Jun as compared to the previous reading of +1.4.
On an annualized basis, the industrial production for June is expected to have dropped 0.2% versus +0.9% previous, while the manufacturing output is also anticipated to have declined 1.1% in the reported month versus 0.0% last.
Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £11.800 billion in Jun vs. £11.524 billion deficit reported in May.
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 disappointing UK GDP report could offer fresh impetus to the GBP bears, as Brexit uncertainty and US-China trade jitters continue to weigh.
Haresh Menghani, FXStreet’s Analyst notes: “From a technical perspective, the pair on Thursday already seems to have confirmed a near-term bearish breakthrough a short-term ascending trend-channel formation and hence, remains vulnerable to weaken further. However, traders are likely to wait for a sustained/follow-through weakness below the 1.2100 handle before positioning for an eventual drop towards challenging the key 1.20 psychological mark.”
“On the flip side, the ascending trend-channel support breakpoint - around mid-1.2100s - coincides with 200-hour SMA and should now act as immediate strong resistance. Momentum beyond the mentioned barrier could get extended back towards the 1.2180-85 supply zone enroute the 1.2200 round figure mark,” Haresh adds.
Key Notes
UK Q2 GDP amongst market movers today – Danske Bank
UK: Q2 GDP likely to contract slightly at -0.1% – TD Securities
GBP/USD remains vulnerable below resistance — Confluence Detector
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.