When are the UK data releases and how could they affect GBP/USD?
The UK Economic Data Overview
The UK industrial production and trade balance data for the month of January are scheduled for release at 0930 GMT in the European session ahead.
The manufacturing production, which makes up around 80% of total industrial production, is expected to ease to 0.2% on monthly basis in Jan, against a 0.3% expansion seen in Dec. Meanwhile, the total industrial production is expected to rebound to 1.5% m/m in Jan, as compared to a -1.3% reading booked previously.
On an annualized basis, the industrial production for Jan is expected to rise sharply to 1.8% versus 0.0% previous, while the manufacturing output figures are seen arriving firmer at 2.8% in the reported month versus 1.4% last.
Separately, the UK goods trade balance will be reported at the same time and is expected to come in at GBP -12.00 billion in Jan vs. GBP -13.57 billion last.
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 between 20 and 35 pips in deviations up to 1.5 to -2.2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips.
How could affect GBP/USD?
The UK releases are likely to be closely eyed by the GBP markets, especially after last week’s trio of upbeat PMI reports and amid looming Brexit concerns.
Better-than-expected data could provide extra legs to the pound’s upside, which could drive the rate back above the 1.3850 barrier, beyond which the doors open up for a test of the 1.39 handle. However, GBP/USD could drop back to test the 1.3780 key support should the data disappoint.
Key Notes
GBP/USD Forecast: weakness below 1.3765 to confirm a bearish breakdown
EUR/GBP heads into NFP Friday with EU trade balance, UK production in the pipe
Sources: UK officials see no Brexit deal until next year - BBG
About the UK manufacturing production and trade balance
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.