Forex Markets

GBP/USD SIGNALS

Default UK Industrial Production - 07-04-2005, 09:27 PM
UK Industrial Production comes out once per month at 4:30 am New York Time.

It measures whether industrial section in the UK did better or worse over previous month. Industrial sector includes factories, mines, and energy providers. If the number is negative, it means that industrial production contracted versus previous month. If the number is positive, it means that industrial production expanded versus previous month.

Industrial production in the UK constitutes approximately 25% of the entire GDP. When the numbers are higher, it means that the economy is doing better, when the numbers are lower, it means that the economy is doing worse.

When UK economy is doing better, it means that they are more likely to increase UK interest rate. When interest rate of a country is higher, it attracts investors to buy its currency, which increases the value of the currency versus other currencies.

So, when Industrial Production comes out better than expected, traders tend to speculatively buy Great British Pounds, so GBP/USD tends to go up. When industrial production comes out worse than expected, traders tend to speculatively sell Great British Pounds, so GBP/USD tends to go down.

To read more about UK Industrial Production, visit the official website that releases it. The link is Home: UK National Statistics Publication Hub

I highly recommend you see the history of this indicator and charts of how it affected GBP/USD and other currencies.

TO TRADE THIS INFO SEE BELOW:

The trigger for this indicator is 2.0. This means that if UK Industrial Production comes out at 2.2 or more, GBP/USD will probably go up by 35 pips or more in the first 45 minutes of the report. If it comes out at -1.8 or more negative, GBP/USD will probably go down by 35 pips or more in the first 45 minutes of the report. The reason why I recommend such big trigger is because this is very unreliable report to trade but if such bigger trigger is hit, chances are it will work.

We will also have UK Manufacturing Production, both m/m and y/y coming out and UK Industrial Production y/y. If they conflict, I recommend skipping the trade, but most likely they won't conflict.

Obviously, the bigger the difference between expected and actual numbers, the bigger will be the move.

To read the after-spike retracement strategy for this report click here: UK Industrial Production (after-spike retracement strategy)

For example: on October 6th, UK Industrial Production came out at -2.5, versus an expectation of 0.2. GBP/USD went down by around 75 pips.