Forex traders will get a swath of UK economic data today which is expected to move the British Pound as the election campaign heats up. GDP data will be front-and-center, together with industrial and manufacturing and production data where economists expected a contraction. Countering this could be an increase in the services sector, construction output and trade data will also be announced. How will this impact price action in the GBPJPY? Today’s fundamental analysis will take a look at price action in both directions.
Japanese data released this morning showed a negative economic environment with an unexpected contraction in machine orders and a smaller than expected account as well as trade surplus. The ECO Watchers Current Index plunged, but the outlook improved while bank lending remained stable. The Japanese Yen was able to advance despite the economic data set as trade optimism is fading. How will the GBPJPY react to today’s UK data? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for British Pound trades:
- UK GDP: The UK Preliminary GDP for September is predicted to decrease by 0.1% monthly. Forex traders can compare this to the UK GDP for August which decreased by 0.1% monthly. The UK Preliminary GDP for the third-quarter is predicted to increase by 0.4% quarterly and by 1.1% annualized. Forex traders can compare this to the second-quarter GDP which decreased by 0.2% quarterly and which increased by 1.3% annualized. Private Consumption for the third-quarter is predicted to increase by 0.4% quarterly, Government Spending is predicted to increase by 0.5% quarterly and Gross Fixed Capital Formation is predicted to decrease by 0.4% quarterly. Forex traders can compare this to second-quarter Private Consumption which increased by 0.4% quarterly, to Government Spending which increased by 1.1% quarterly and to Gross Fixed Capital Formation which decreased by 0.9% quarterly. UK Exports for the third-quarter are predicted to increase by 2.9% quarterly and UK Imports are predicted to increase by 2.0% quarterly. Forex traders can compare this to second-quarter UK Exports which decreased by 6.6% quarterly and to UK Imports which decreased by 13.0% quarterly. UK Total Business Investment for the third-quarter is predicted to decrease by 0.5% quarterly and by 1.1% annualized. Forex traders can compare this to UK Total Business Investment for the second-quarter which decreased by 0.4% quarterly and by 1.4% annualized.
- UK Construction Output Seasonally Adjusted: UK Construction Output Seasonally Adjusted for September is predicted to decrease by 0.5% monthly and to increase by 0.8% annualized. Forex traders can compare this to UK Construction Output Seasonally Adjusted for August which increased by 0.2% monthly and by 2.4% annualized.
- UK Industrial Production and UK Manufacturing Production: UK Industrial Production for September is predicted to decrease by 0.1% monthly and by 1.2% annualized. Forex traders can compare this to UK Industrial Production for August which decreased by 0.6% monthly and by 1.8% annualized. UK Manufacturing Production for September is predicted to decrease by 0.2% monthly and by 1.6% annualized. Forex traders can compare this to UK Manufacturing Production for August which decreased by 0.7% monthly and by 1.7% annualized.
- UK Trade Balance: The UK Visible Trade Balance for September is predicted at -£10.100B. Forex traders can compare this to the UK Visible Trade Balance for August which was reported at -£9.806B. The UK Trade Balance Non EU for September is predicted at -£2.500B. Forex traders can compare this to the UK Trade Balance Non EU for August which was reported at -£2.206B. The UK Total Trade Balance for September is predicted at -£2.000B. Forex traders can compare this to the UK Total Trade Balance for August which was reported at -£1.546B.
- UK Index of Services: The UK Index of Services for September is to increase by 0.1% monthly and by 0.4% for the three-month-over-three-month period ending in September. Forex traders can compare this to the UK Index of Services for August which was reported flat at 0.0% monthly and which increased by 0.4% for the three-month-over-three-month period ending in August.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Bank Lending: Japanese Bank Lending including Trusts for October increased by 2.0% annualized and Japanese Bank Lending excluding Trusts increased by 2.2% annualized. Forex traders can compare this to Japanese Bank Lending including Trusts for September which increased by 2.0% annualized and to Japanese Bank Lending excluding Trusts which increased by 2.2% annualized.
- Japanese Machine Orders: Japanese Machine Orders for September decreased by 2.9% monthly and increased by 5.1% annualized. Economists predicted an increase of 0.9% monthly and of 8.1% annualized. Forex traders can compare this to Japanese Machine Orders for August which decreased by 2.4% monthly and by 14.5% annualized.
- Japanese Current Account Balance and Trade Balance: The Preliminary Japanese Current Account Balance for September was reported at ¥1,612.9B. Economists predicted a figure of ¥1,710.0B. Forex traders can compare this to the Japanese Current Account Balance for August which was reported at ¥2,157.7B. The Preliminary Japanese Adjusted Current Account Balance for September was reported at ¥1,485.2B. Economists predicted a figure of ¥1,664.0B. Forex traders can compare this to the Japanese Adjusted Current Account Balance for August which was reported at ¥1,720.3B. The Preliminary Japanese Trade Balance for September was reported at ¥1.1B. Economists predicted a figure of ¥51.3B. Forex traders can compare this to the Japanese Trade Balance for August which was reported at ¥50.9B.
- Japanese Eco Watchers Survey: The Japanese Eco Watchers Survey Current Index for October was reported at 36.7 and the Japanese Eco Watchers Survey Outlook Index was reported at 43.7. Economists predicted a figure of 40.6 and of 41.9. Forex traders can compare this to the Japanese Eco Watchers Survey Current Index for September which was reported at 46.7 and to the Japanese Eco Watchers Survey Outlook Index which was reported at 36.9.
Should price action for the GBPJPY remain inside the or breakdown below the 138.650 to 140.200 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 139.500
- Take Profit Zone: 133.950 – 135.500
- Stop Loss Level: 140.750
Should price action for the GBPJPY breakout above 140.200 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 140.750
- Take Profit Zone: 143.200 – 143.800
- Stop Loss Level: 140.200
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