The UK Gross Domestic Product (GDP) grew 0.5% MoM in February, following a 0% reported in January, the latest data published by the Office for National Statistics (ONS) showed on Thursday.
The market forecast was for a 0.1% rise in the same period.
Meanwhile, the Index of services (February) rose 0.5% 3M/3M versus January’s 0.2%.
Other data from the UK showed that monthly Industrial Production climbed by 0.5% MoM in February, while Manufacturing Production declined by 0.1% during the same period.
Market reaction to the UK data
The Pound Sterling attracts some buyers following the UK data. At the press time, the GBP/USD pair is gaining 0.13% on the day to trade at 1.3578.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.12% | -0.11% | -0.11% | -0.22% | 0.03% | -0.08% | |
| EUR | 0.04% | -0.09% | -0.06% | -0.08% | -0.18% | 0.03% | -0.04% | |
| GBP | 0.12% | 0.09% | 0.04% | -0.00% | -0.10% | 0.12% | 0.04% | |
| JPY | 0.11% | 0.06% | -0.04% | -0.03% | -0.11% | 0.07% | 0.02% | |
| CAD | 0.11% | 0.08% | 0.00% | 0.03% | -0.10% | 0.12% | 0.04% | |
| AUD | 0.22% | 0.18% | 0.10% | 0.11% | 0.10% | 0.21% | 0.16% | |
| NZD | -0.03% | -0.03% | -0.12% | -0.07% | -0.12% | -0.21% | -0.08% | |
| CHF | 0.08% | 0.04% | -0.04% | -0.02% | -0.04% | -0.16% | 0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
This section was published on Thursday at 04:31 GMT as a preview of UK GDP data.
The UK Economic Data Overview
Thursday’s UK economic docket features the release of the monthly GDP print, alongside the Trade Balance and Industrial Production, all of which will be published by the Office for National Statistics (ONS) at 06:00 GMT.
The UK economy is expected to have expanded by 0.1% in February, up from a flat reading in the previous month. Meanwhile, the Manufacturing Production, which makes up around 80% of total Industrial Production, is anticipated to show a 0.3% MoM rise, up from a modest of 0.1% increase in January. Meanwhile, the total Industrial Production seems to be coming in at 0.0% MoM in February as compared to the previous reading of -0.1%.
On an annualized basis, the Industrial Production is expected to have contracted by 0.9 versus 0.4% growth in the previous month, while the manufacturing output is also anticipated to have fallen by 0.3% in the reported month, versus 1.3% last month. Simultaneously, the UK Goods Trade Balance will be reported and is anticipated to show a deficit of £20.02 billion in February vs a £14.449 billion deficit reported in the previous month.
How could the UK data affect GBP/USD?
A surprisingly stronger UK macro data could benefit the British Pound (GBP). In contrast, any disappointment is more likely to be overshadowed by expectations that the war-driven surge in energy prices will revive inflation and force the Bank of England (BoE) to adopt a more hawkish stance. This, along with the prevailing US Dollar (USD) selling bias, suggests that the path of least resistance for the GBP/USD pair is to the upside.
GBP/USD daily chart
Technical Analysis:
The recent breakout through the 1.3415-1.3425 confluence resistance– comprising the 200-day Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the January-March fall – was seen as a key trigger for bullish traders. Moreover, the subsequent strength beyond the 1.3500 psychological mark, which coincided with the 50% retracement level, validates the near-term positive outlook for the GBP/USD pair.
Meanwhile, momentum indicators also back the positive bias. In fact, the Relative Strength Index (RSI) hovers around 63, and the Moving Average Convergence Divergence (MACD) line is positioned above zero with an expanding positive histogram. This hints that buyers still have the upper hand as long as price holds above the resistance breakpoints, though bulls might still await a move beyond the 61.8% Fibo. level.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data.
Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates.
When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP.
A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Source: https://www.fxstreet.com/news/when-are-the-uk-data-releases-and-how-could-they-affect-gbp-usd-202604160431
