| The £ Economic Indicators
Here we will list the most important UK economic indicators followed by traders, investors and analysts.
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Current Account - UK
Description: Summarizes the flow of all goods, services, income, and transfer payments to and from the UK. The report acts as a gauge for how the UK economy interacts with the rest of the world. CA tracks the trade balance (exports and imports for goods and services), income payments (such as interest, dividends and salaries) and unilateral transfers (aid, taxes, and one-way gifts). Current account is one of the three components (Financial Account, Capital Account and Current Account) that make up a country's Balance of Payments, the detailed accounting of all international interactions. Where the other side of the Balance of Payments, Capital and Financial Accounts deal mainly with financial assets and investments, the Current Account gives a detailed breakdown of how the country intermingles with rest of the global economy on a routine, non-investment basis.
Release Date: 8:30 (GMT); quarterly, in the end of the final month following the reference quarter
The headline number is the Current Account balance and the percentage change in the Current Account from the previous quarter, and the value of the CA in Pounds.
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Trade Balance - UK
Description: The difference between exports and imports of British goods and services. The Trade Balance is one of the biggest components of the United Kingdom 's Balance of Payment, thus giving valuable insight into pressures on the value of the Pound.
A positive Balance of Trade figure (surplus) indicates that exports are greater than imports. When imports exceed exports, the UK experiences a trade deficit. Because foreign goods must be purchased using foreign currency, trade deficits fundamentally reflects that the Sterling is leaking out of the country. Such currency outflows may lead to a natural depreciation of a Pound, unless countered by similar capital inflows. At a bare minimum, deficits will weigh down the value of the currency.
Release Date: 8:30 (GMT); monthly, within 40 days following the report month
The headline figure for trade balance is typically expressed in billions of Pounds and usually accompanied by a year-on-year percentage change figure.
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Non EU Trade Balance - UK
Description: A gauge of Britain's trade with countries outside of Europe. The headline figure, expressed in billions of Pounds, is the value of exports to Non European Union countries minus the value of imports from those countries. A positive value represents a trade surplus while a negative value amounts to a trade deficit. The value of Great Britain's non-EU trade is about 30% less than that of its intra-EU trade, and the distinction between EU and non-EU figures can help investors anticipate which currency pairs will be most affected by changes in the UK trade balance.
Release Date: 8:30 (GMT); monthly, within 40 days following the reporting month.
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Visible Trade Balance - UK
Description: The difference between imports and exports of goods. Visible Trade differentiates itself from Trade Balance because it does not record intangibles like services, only reporting on physical goods. Because Britain's economy is highly trade driven, Visible Trade data can give critical insight into developments in the economy and into foreign exchange rates.
Negative Visible Trade (deficit) indicates that imports of goods are greater than exports. When exports are greater than imports, the UK experiences a trade surplus. Trade surpluses indicate that funds are coming into the UK in exchange for exported goods. Because such exported goods are usually purchased with Pounds, trade surpluses usually reflect currency flowing into Britain, such currency inflows may lead to a natural appreciation of Pound Sterling, unless countered by similar capital outflows. At a bare minimum, surpluses will buoy the value of the currency.
Release Date: 8:30 (GMT); monthly, within 40 days following the reporting month
There are a number of factors that work to diminish the market impact of UK Visible Trade on markets. The report is not very timely, released monthly about forty days after the reporting period. Developments in many of the components that comprise the figure are also usually well anticipated. Lastly, since the report reflect data for a specific reporting month, any significant changes in Visible Trade should plausibly have been already felt during that quarter and not during the release of data. But because of the overall significance of Trade on Foreign Exchange Rates, the figure has a history of being one of the more important reports out of the UK.
The headline figure is expressed as the value of the merchandise trade surplus or deficit in billions of Pounds.
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Gross Domestic Product (GDP) - UK
Description: An indicator for broad overall growth in the United Kingdom. Robust GDP growth signals a heightened level of economic activity, and therefore a high demand for currency. Economic expansion also raises concerns about inflationary pressure, which generally prompts monetary authorities to increase interest rates. This means that positive GDP readings are generally bullish for a given currency, while negative readings are bearish.
Release Date: 8:30 (GMT); quarterly, released approximately 3.5 weeks after end of quarter
Due to the untimeliness of this report and because data on GDP components are available beforehand, the actual GDP figure is usually well anticipated. But given its overall significance GDP has the tendency to move the market upon release, acting to confirm or upset economic expectations. robust GDP growth signals a heightened level of activity that is generally associated with a healthy economy. However economic expansion also raises concerns about inflationary pressures which may lead to monetary policy tightening.
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NIESR GDP Estimate - UK
Description: An unofficial estimate of UK GDP that comes out one month before the official release. Calculated using statistical projection techniques, the NIESR estimates are highly respected and can influence monetary policy.
Release Date: 23:01 (GMT); monthly, within 2 weeks of reporting month's end
The meaning and consequences of the report are very close to those for official GDP numbers. A high rate of growth signals a heightened level of economic activity. Such expansion also raises concerns about inflationary pressure, which may prompt monetary authorities to increase interest rates. Accordingly, high NIESR GDP Estimates are generally bullish for the Pound, while negative readings are bearish.
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Consumer Price Index (CPI) - UK
Description: Measures the change in prices for retail goods and services, including food and gas. The CPI is the key measure of inflation for the UK and is used by the Bank of England in making interest rate decisions. The report tracks changes in the price of a basket of goods and services that a typical British household might purchase. An increase in the index indicates that it takes more Sterling to purchase this same set of basic consumer items.
Release Date: 8:30 (GMT); monthly, mid-month following the reporting month
A different form of the CPI is the Core CPI, which excludes prices for volatile items such as energy and food. The Core CPI is considered a better measure of inflation, as it excludes items that can distort the actual change in the cost of living.
In order to manage inflation the Bank of England may raise interest rates, which slows economic growth. Higher interest rates make holding the Pound more attractive to foreign investors, and the higher level of demand will place upward pressure on the value of the Pound.
CPI figures are reported as the annualized month-to-month and annual percentage change in the index.
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