If you’re looking to grab forex profits by trading the British pound, then you’d be delighted to know that the U.K. has four major economic events lined up this week. Lovely, eh? Grab a cup o’ tea while I fill you in on what’s expected from these reports and how GBP/USD reacted in the previous releases.
1. U.K. CPI (Tues, 9:30 am GMT)
It’s no secret that the U.K. is still reeling from the aftermath of the oil price slump, as the economy posted a negative headline inflation reading for April. This spurred a sharp selloff for Cable when forex traders realized that the prospect of deflation in the U.K. was all too real.
For the month of May, headline CPI is expected to show a 0.1% uptick while core CPI could climb from 0.8% to 1.0%. However, another set of disappointing results might lead to a nasty tumble for the pound since these would show that price levels are far from recovering.
2. U.K. Claimant Count Change (Wed, 9:30 am GMT)
After having an impressive streak of hiring gains earlier this year, the latest jobs figures from the U.K. have been as mixed as a bag of M&Ms. In April, the claimant count fell by only 6.5K instead of the projected 20.5K drop in joblessness, following the bleaker than expected employment data for March.
In the upcoming jobs release, the U.K. is expected to show a 12.5K reduction in unemployment, which might be enough to keep the jobless rate steady at 5.5% in May. Stronger than expected data could pave the way for forex gains for the pound but note that this report will be sharing the spotlight with the release of the BOE meeting minutes.
3. BOE MPC Meeting Minutes (Wed, 9:30 am GMT)
BOE Guv’nah Carney and his gang of policymakers decided to hold their fire in their latest monetary policy statement, keeping interest rates and asset purchases unchanged as expected. Their announcement didn’t have a lot of forex fanfare among the pound pairs though, as traders are still waiting for the transcript of their huddle to be released.
In their previous policy meeting, BOE officials decided unanimously to maintain the status quo while still mentioning that their next move is likely to be a rate hike. Since then, economic data from the U.K. has failed to impress, which means that there’s a chance that MPC members might sound a little more cautious this time.
4. U.K. Retail Sales (Thurs, 9:30 am GMT)
Last but certainly not least is the U.K. retail sales release towards the end of the week. This is also a pretty huge deal for the U.K. economy and the British pound since Guv’nah Carney usually emphasizes that the downturn in inflation would translate to stronger consumer spending.
The April retail sales report did reflect a pickup in spending, with the headline figure showing a stronger than expected 1.2% gain versus the projected 0.4% uptick. Because of that, the British pound chalked up significant gains against its forex counterparts right after the numbers came out.
For the month of May, the consumer spending report could print a flat reading, which might remind traders that Brits are still being prudent with their hard-earned cash. Nonetheless, stronger than expected data could underscore Carney’s view that consumers are taking advantage of bargain prices and might keep overall growth supported.
As you’ve probably noticed from the forex charts I’ve posted earlier, these U.K. economic reports serve up pretty good day trade opportunities. GBP/USD typically consolidates prior to the release and starts moving in a particular direction minutes before the actual numbers come out. Just be careful since the pair can be prone to fake outs and that price could slip back in consolidation around the end of the London trading session. If you’re new to all this, make sure you review our lesson on How to Trade News Releases!