The UK Economic Data Overview
The UK docket has the monthly and the fourth quarter GDP releases today, alongside the trade balance and industrial production, all of which will be published later this session at 0930 GMT.
The United Kingdom GDP is expected to arrive at 0.0% m/m in December while the first readout of the Q4 GDP is seen at 0.2% 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 growth of 0.1 % in December, up from a contraction of 0.3% recorded in November. The total industrial production is expected to come in at 0.2% m/m in Dec as compared to the previous reading of -0.4%.
On an annualized basis, the industrial production for Dec is expected to have dropped 0.4% versus -1.5% 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 £11.800 billion in Dec vs. £12.020 billion deficit reported in November.
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?
The downbeat UK GDP figures could offer extra zest to the GBP bears, as the Brexit uncertainty continue to undermine the sentiment around the pound.
Haresh Menghani, FXStreet’s Analyst notes: “Looking at the technical picture, the pair has been trending lower along a short-term descending channel and every attempted bounce remained capped at 100-day SMA. The mentioned SMA, currently near the 1.2955-60 zone, closely followed by the channel resistance, around the 1.2975 region might continue to act as immediate resistance levels, above which the pair is likely to surpass the key 1.30 psychological mark and aim towards testing its next hurdle near the 1.3060-65 region.”
“On the flip side, 50-day SMA, around the 1.2900-1.2895 region, might continue to protect the immediate downside, which if broken might turn the pair vulnerable to accelerate the fall towards last week's swing high, around mid-1.2800s, before eventually dropping to test the trend-channel support,” Haresh adds.
Market themes of the Day: UK GDP and the manufacturing output headline
UK data and Brexit eyed, while US team heads to Beijing for more talks
GBP futures: potential rebound on the cards
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.
|Monday, Feb 11|
|09:30||GBP Gross Domestic Product (YoY)||1.4%||1.5%|
|09:30||GBP Gross Domestic Product (QoQ)||0.2%||0.6%|
|09:30||GBP Manufacturing Production (YoY)||-0.7%||-1.1%|
|09:30||GBP Manufacturing Production (MoM)||0.1%||-0.3%|
|09:30||GBP Industrial Production (MoM)||0.2%||-0.4%|
|09:30||GBP Industrial Production (YoY)||-0.4%||-1.5%|
|09:30||GBP Total Business Investment (YoY)||-2.9%||-1.8%|
|09:30||GBP Total Business Investment (QoQ)||0.2%||-1.1%|
|09:30||GBP Index of Services (3M/3M)||0.3%||0.3%|
|09:30||GBP Trade Balance; non-EU||£-3.592B||£-3.925B|