UK GDP Overview
The Office for National Statistics (ONS) will release the preliminary readings of the third quarter (Q3) UK GDP numbers at 07:00 GMT on Thursday. Although market forecasts suggest a reversal of the previous -19.8% contraction with +15.8% growth on QoQ, the recovery is likely to fade on the yearly basis, expected -9.4% versus -21.5% prior. Additionally, figures exclude the latest lockdown and there are doubts concerning Brexit and coronavirus (COVID-19) that are stronger to move the GBP/USD pair. As a result, today’s Q3 UK GDP is less likely to become a trend changer.
In addition to the quarterly GDP, September month’s growth figures will accompany Trade Balance and Industrial Production details for the stated period to keep the Cable traders busy on early Thursday.
Forecasts suggest that the UK GDP will ease to 1.5% MoM in September versus 2.1% prior while the Index of Services (3M/3M) for the same period is seen recovered from 7.1% to 11.2%.
Meanwhile, the Manufacturing Production, which makes up around 80% of total industrial production, is expected to rise 1% MoM in September against 0.7% recorded in August. Further, the total Industrial Production is expected to come in at 0.8% MoM as compared to the previous reading of 0.3%.
Considering the yearly figures, the Industrial Production for September is expected to have recovered to -6.1% versus -6.4% previous while the Manufacturing Production is also anticipated to have declined by 7.4% in the reported month versus -8.4% last.
Separately, the UK Goods Trade Balance will be reported at the same time and is expected to show a deficit of £9.5 billion versus a £9.01 billion deficit reported in August.
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 over 60-70 pips.
How could it affect GBP/USD?
At the time of press, the pre-London open trading on Thursday, GBP/USD refreshes the intraday low while declining towards 1.3200, down 0.10% on a day. The Cable recently bears the burden of the US dollar swing on fears of the wider outbreak of the COVID-19 as well as chatters concerning hard Brexit. Even so, the pair stays positive on the weekly candle, while also probing 10-week high, amid hopes of a Brexit deal between the European Union (EU) and the UK.
Given the recent weakness of the pair, any more disappointment from the British GDP data, other than already known, might not refrain from recalling the bears.
Technically, spinning-top candlestick on the daily chart, formed Wednesday, probe the bulls until they conquer the 1.3300 threshold.
Key notes
GBP/USD Forecast: Brexit talks delayed again, Pound takes the hit
UK Gross Domestic Product Preview: Good news, old news
GBP/USD Price Analysis: Wednesday’s spinning top portray traders’ indecision above 1.3200
About the UK Economic Data
The Gross Domestic Product (GDP), 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).
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