TheNews

Trading the News: U.K. Industrial & Manufacturing Production

A rebound in U.K. Industrial & Manufacturing Production may boost the economic outlook for the U.K. economy and spur a near-term rebound in GBP/USD as it raises the scope for a stronger-than-expected recovery.

What’s Expected:



Why Is This Event Important:

Beyond the looming U.K. Referendum in June, positive data prints coming out of the region may put increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later as central bank officials see a risk of overshooting the 2% inflation target over the policy horizon.

However, waning demand from home and abroad may drag on business outputs, and an unexpected contraction in industrial & manufacturing production may drag on the British Pound as it gives the BoE greater scope to retain the record-low interest rate for an extended period of time.

How To Trade This Event Risk
Bullish GBP Trade: Industrial & Manufacturing Production Rebounds in March

• Need red, green-minute candle following the report to consider a long British Pound trade.
• If market reaction favors bullish sterling trade, short GBP/USD with two separate position.
• Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit, set reasonable limit.

Bearish GBP Trade: U.K. Business Outputs Fall Short of Market Forecast

• Need red, five-minute candle to favor a short GBP/USD trade.
• Implement same setup as the bullish British Pound trade, just in reverse.

Potential Price Targets For The Release
GBPUSD Daily

• GBP/USD may continue to threaten the downward trend from back in November as the pair carves a near-term series of higher lows in 2016, while the Relative Strength Index (RSI) largely preserves the bullish formation from January.
• Interim Resistance: 1.4910 (61.8% retracement) to 1.4930 (38.2% expansion)
• Interim Support: 1.3870 (78.6% expansion) and 1.3960 (50% expansion)

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