UK Economic Data Snapshot
The UK economic calendar is set to entertain cable operators during Friday morning off-peak hours at 07:00 GMT with October GDP figures for 2021. Details of the trade balance and industrial production for the period shown are also rising the importance of this period. .
After witnessing a 0.6% acceleration in economic activity the previous month, market participants will look to October’s monthly GDP figures to confirm the economic transition amid Omicron fears and further restrictions on the economy. ‘activity.
Forecasts suggest that UK GDP will ease to 0.4% month-on-month in May from + 0.6% previously. GBP / USD traders are also awaiting the services index (3M / 3M) for the same period, + 1.6% previously, for more information.
At the same time, manufacturing output, which accounts for around 80% of total industrial output, is expected to fall from -0.1% to + 0.0% month-on-month in October. However, total industrial production is expected to recover from -0.4% MoM to + 0.1%.
Considering the annual figures, October industrial production is expected to have declined to + 2.2% from + 2.9% previously, while manufacturing output is also expected to have fallen to 1.7% in the reported month from 2 , 8% the last.
Separately, the UK’s merchandise trade balance will be released at the same time and is expected to show a deficit of £ 14.059 billion against a deficit of £ 14.736 billion reported in March.
Impact of deviation on GBP / USD
Readers can find FX Street’s exclusive deviation impact map below. As observed, the reaction is likely to stay confined around 20 pips in spreads of up to + or -2, although in some cases, if noticeable enough, a deviation can fuel moves over 60 to 70. pips.
How could the GBP / USD pair affect?
GBP / USD is struggling for clear direction near annual low, defending the 1.3200 level at press time. The latest weakness in the cable pair could be linked to recent fears that economic woes brought on by Brexit are joining the latest lockdown measures to push the Bank of England (BOE) away from rate hikes. The same contrasts with growing hawkish concerns about the Fed’s next move to put further bearish pressure on the cable pair. However, the market’s expectation for US Consumer Price Index (CPI) data is limiting the pair’s recent moves.
That said, today’s UK data dump may not provide much entertainment for GBP / USD traders as US inflation is gaining attention. Even so, softer data may not hesitate to drag the quote to a new annual low.
Prior to publication, TD Securities said:
We expect the UK economy to grow 0.5% m / m in October (forecast: 0.4%), driven by the service sector at 0.6% m / m (market expectations: 0.4 %). While the past month saw a sharp acceleration in growth in health services, we expect the strength in October to come from other service sectors, in part thanks to accelerating consumer demand in the face of rising consumer demand. fears of shortages at the end of the year. On the other hand, the manufacturing sector probably weighed on growth with a relatively sharp drop of -1.0% (consensus: 0.1%), partly driven by a drop in the production of motor vehicles. Overall, that would leave GDP growth roughly on track with the BoE’s recent forecast of 1.0% q / q.
Technically, GBP / USD declines remain bullish as a descending trendline from October 28 limits an immediate rise to around 1.3230.
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About UK economic data
The Gross Domestic Product published by the Office for National Statistics (ONS) is a measure of the total value of all goods and services produced by the UK. GDP is considered to be a general measure of economic activity in the UK. Generally speaking, an uptrend has a positive effect on the GBP, while a downtrend is considered negative (or bearish).
Manufacturing output published by the Office for National Statistics (ONS) measures manufacturing output. Manufacturing output is important as a short-term indicator of the strength of UK manufacturing activity which dominates much 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 published by the Office for National Statistics (ONS) is a balance between exports and imports of goods. A positive value indicates a trade surplus, while a negative value indicates a trade deficit. This is an event that generates some volatility for the GBP.