Forex Trading Signals by Magister Pips, 2012/01/25
04:30 UK GDP q/q Preliminary Q4 2011 (-0.1% exp, +0.6% prior, -0.7% to +0.2% range)
Top Analyst Estimates - 2nd: -0.1% 3rd: -0.1% 4th: -0.7% 5th: +0.1%
Affliated Reports:
UK GDP y/y final (+0.8% exp, +0.5% prior, +0.2% to +1.1% range)
Top Analyst Estimates - 1st: +1.1% 2nd: +0.9% 4th: +0.9%
UK Index of Services (MoM) (+0.4% exp, -0.7% prior, 0.0% to +0.7% range)
UK Index of Services (3mth/3mth) (-0.1% exp, +0.2% prior, -0.1% to +1.1% range)
UK BBA Loans for House Purchase (35000 exp, 34738 prior, 34300 to 36000 range)
December's final reading for Q3 had a tiny surprise of +0.1 when normally the final reading does
not deviate, however the GBPUSD did not care about it too much and actually blipped up only 5 pips
and then reversed about 15, then chopping in that range for 15 minute before rallying 35 pips into
the top of the hour 10am GMT. Anyhow this is preliminary data for Q4 and there have been many
skeptical talking heads on the media about growth in the UK. Preliminary tends to be the most
volitile of all the GDP releases, and most likely to deviate as the data has not completely been
processed like it is for the final release. Last Prelimary release there was Manufacturing PMI
at the same time and today there is the BOE minutes report. Whether this is a conspiracy to make
it difficult for news trader is open to question. On that Oct 1st release the GDP was higher by
+0.2 however the PMI Manufacturing came out at 47.4 versus the 50 expected. A +0.2 deviation on
GDP is good enough to make cable rally, however the PMI data won out probably because PMI data is
more forward looking than GDP which is a lagging indicator. There was a bit of initial whipsaw of
30 pips before GBPUSD resolved lower after the intial minute. The BOE minutes might give a hint
of further QE from the BOE as many are already expecting this to be hiked again during the February
MPC decision. So this could get whippy, but any hint of more QE should initially weaken the pound
as it did on October 6th but then GBPUSD did rally hard...more QE could also stimulate the economy
and growth so this could actually help cable but in the longer term, initial reaction would still
be a sell. That is the tail risk for the BOE minutes, thus on a negative deviation on GDP we could
be more likely to sell, but on a positive deviation the BOE minutes may interfer. Of course we do
not know what will be in the BOE minutes, there maybe some surprise, but remember they are from
2 weeks ago, and the situation back then was more dire. As we saw on October 1st the intial reaction
was to follow the GDP, this could happen again today, but it will not take much longer for the market
to react to the BOE minutes so it could get dangerous. A +/-0.2 is usually good enough for this,
one thing to do is widen out a bit for safety.
It it comes out at +0.2% or higher, GBP/USD should rally 40 pips.
If it comes out at -0.3% or lower, GBP/USD should drop 40 pips.
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