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Fundamental Forex Analysis

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 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 0930 GMT.

The United Kingdom GDP is expected to arrive at 0% MoM in November while the Index of Services (3M/3M) for November is seen steady at +0.2%.

Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to drop by 0.2% MoM in November, deteriorating from a rise of 0.2% recorded in October. The total industrial production is expected to come in at -0.2% MoM in Nov as compared to the previous reading of +0.1%.

On an annualized basis, the industrial production for Nov is expected to have dropped 1.4% versus -1.3% previous, while the manufacturing output is also anticipated to have declined by 1.6% in the reported month versus -1.2% last.

Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £11.603 billion in Nov vs. £14.486 billion deficit reported in Oct.

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?

At the press time, the GBP/USD extends the downside momentum amid increased dovish Bank of England (BOE) expectations, as the bears now attack the 1.30 handle heading into the critical UK macro releases.   

According to NDDFX’s Analyst. Haresh Menghani: “From a technical perspective, nothing seems to have changed much for the pair and the near-term bias remains tilted in favor of bearish traders. This coupled with the fact that the pair has now found acceptance below the 23.6% Fibonacci level of the 1.3515-1.2905 recent downfall add credence to the negative outlook. Sustained weakness below the 1.30 handle will reaffirm the bearish bias and accelerate the slide further towards testing its next major support near the 1.2925 horizontal zone ahead of the 1.2900 round-figure mark.”

On the flip side, the 1.3100 round-figure mark now seems to have emerged as immediate resistance. Any subsequent recovery might now confront some fresh supply and remain capped near the 1.3130-35 confluence resistance – comprising of 200-hour SMA and 38.2% Fibo. Level”, Haresh adds.

Key Notes

UK GDP amongst market movers today – Danske Bank

GBP/USD has significant support only at 1.29— Confluence Detector

GBP Futures: extra downside looks 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. 

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