The UK Economic Data Overview
The UK industrial production and trade balance data for the month of April are scheduled for release at 0830 GMT during the European session on Monday.
The manufacturing production, which makes up around 80% of total industrial production, is expected to show m/m growth of 0.3% in April, up from a contraction of 0.1% recorded in March. Meanwhile, the total industrial production is expected to come in at 0.1% m/m in April as compared to previous month’s reading of +0.1%.
On an annualized basis, the industrial production for April is expected to have risen to 2.7% versus 2.9% previous, while the manufacturing output is also anticipated to have accelerated to 3.1% in the reported month versus 2.9% last.
Separately, the UK goods trade balance will be reported at the same time and is expected to come in to show a deficit of £11.35 billion in April vs. £12.3 deficit reported last month.
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?
Against the backdrop of recent positive UK data, today’s releases would be looked upon to further reinforce BoE rate hike expectations and eventually provide some meaningful impetus for the GBP traders. However, market reaction is likely to be short-lived ahead of this week’s other important macro releases and the key event risk – the latest FOMC monetary policy update, due to be announced on Wednesday.
On a sustained move beyond the 1.3430 immediate resistance is likely to accelerate the up-move towards 1.3460-65 horizontal hurdle before the pair eventually darts towards reclaiming the key 1.3500 psychological mark.
Alternatively, a break below the 1.3400 handle, leading to a subsequent break below the 1.3380 support might turn the pair vulnerable to continue drifting lower and head towards testing its next major support near the 1.3300 round figure mark.
Key Notes
UK: Focus on trade and industrial production data – Nomura
GBP/USD Challenges Support of Critical Bear Flag Pattern
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.
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