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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 0830 GMT.

The UK GDP is expected to arrive at 0.0% m/m in August while the Index of Services (3M/3M) for August likely stood at +0.1%.

Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to show m/m figure of 0.0% in Aug vs. a rise of 0.3% recorded in July. The total industrial production is expected to come in at -1.9% m/m in August as compared to the previous reading of -0.7%.

On an annualized basis, the industrial production for Aug is expected to have dropped 0.9% versus -0.9% previous, while the manufacturing output is also anticipated to have declined 0.7% in the reported month versus -0.6% last.

Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £10.00 billion in Aug vs. £9.14 billion deficit reported in July.

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 reinforce the GBP bears, especially with looming Brexit/ UK political uncertainty.

On the disappointing data, the spot could turn south, where the next support around 1.2200 awaits. A break below the last would open floors for a test of 1.2176 (classic daily S1/ Fib S2) and 1.2150 (psychological levels).

Should the data better estimates, the bulls could help the Cable regain the 1.2250 level, with the next resistances aligned at 1.2280 (10-DMA) and 1.2300 (round number).

Key Notes

UK: August GDP likely to come in with a modest 0.2% gain – TD Securities

GBP Futures: scope for a rebound near term

Forex Today: US-Sino currency pact report lift markets, last-chance saloon Brexit meeting, Bitcoin ignores bad news

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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