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 0830 GMT.

The United Kingdom GDP is expected to arrive at 0.0% m/m in February versus 0.5% booked in January.

Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to arrive at 0.2% m/m in February, up from an expansion of 0.8% recorded in January. The total industrial production is expected to come in at 0.1% m/m in Feb as compared to the previous reading of 0.6%.

On an annualized basis, the industrial production for Feb is expected to have dropped 0.9% versus -0.9% previous, while the manufacturing output is also anticipated to have dropped 0.7% in the reported month versus -1.1% last.

Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £12.70 billion in Feb vs. £13.084 billion deficit reported in Jan.

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 bigger-than-expected drop in the UK GDP figures could trigger fresh GBP selling across the board, but the reaction to the data dump is expected to limited, as the outcome of the European Council summit on Brexit will emerge the main driver.

Haresh Menghani, FXStreet’s Analyst notes: “The 1.3035-30 region, closely followed by the key 1.30 psychological mark and the 1.2980-75 region (200-DMA) might continue to act as immediate support levels, which if broken decisively will confirm a near-term bearish breakdown and accelerate the slide towards the 1.2900 handle before the pair eventually drops to test the 1.2865-60 support area.” 

“On the flip side, a sustained move beyond the mentioned (1.3200) barrier might negate any near-term bearish bias and set the stage for an extension of the positive momentum further towards the 1.3265-70 resistance area.,” Haresh adds.

Key Notes

UK: Upside risks for monthly GDP - TDS

Brexit Summit Preview: 3 scenarios - Flextension, Euro-Fudge, or Brexident

GBP futures: extra consolidation likely

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.