Let’s have a look at the high impact news events that shake GBP pairs. The following news events may create extreme volatility, thus traders need to be aware of such events.
BOE Gov Speaks
Speeches from Bank of England’s governor create volatility on GBP pairs. It is considered one of the most ‘high impact news events’ in the Forex market, and it may create volatility in other pairs as well. Forex traders pay close attention to the governor’s speech since he is the head of the central bank which controls short term interest rates and other monetary policies.
GDP stands for Gross Domestic Product which is measured by the change in the total value of all goods and services produced by the economy. If the actual figure comes out greater than forecast, it is good for the currency. The figure is released monthly about 40 days after the month ends. It is considered a high impact news event since it sometimes creates high volatility in GBP pairs.
Manufacturing Production m/m
Manufacturing Production, also called Factory Production is measured by the change in the total inflation-adjusted value of output produced by manufacturers. Like “GDP m/m”, if the actual figure comes out greater than forecast, it is good for currency. This figure is released monthly about 40 days after the month ends. Traders care about Manufacturing Production m/m since it indicates economic health. Ups and downs of the business cycle quickly find a reaction on production. Moreover, it is correlated with consumer conditions such as employment levels and earnings.
Average Earnings Index 3m/y
Average Earnings Index 3m/y is also known as Average Earnings Including bonuses, which is measured by the change in the price businesses and the government pays for labour, including bonuses. The figure is released monthly about 45 days after the month ends. If the actual figure comes out greater than forecast, it is good for the currency. Traders care because it indicates consumer inflation. If businesses pay more for labour, the higher costs are usually passed on to the consumer.
CPI stands for Consumer Price Index which is measured by the change in the price of goods and services purchased by consumers. It is released monthly about 16 days after the month ends. It is used as the central bank’s inflation target, so this is considered the UK’s most important inflation data. Overall inflation depends on the consumer prices index and inflation is important for currency valuation. This leads the central bank to raise interest rates.
Retail Sales m/m
It is also known as sales volume. All retailers’ sales are measured by the change in the total value of inflation-adjusted sales at the retail level. It is released monthly about 20 days after the month ends. If the actual figure comes out greater than forecast, it is good for the currency. Traders care about the outcome of it since it is the primary gauge of consumer spending that accounts for the majority of overall activity. Thus, it often creates high volatility in GBP pairs.
MPC Official Bank Rate Votes
MPC stands for Monetary Policy Committee. Meeting minutes of the BOE’s MPC contains the interest rate vote for each MPC member during the most recent meeting. The vote is reported in an ‘X-X-X’ format. The first number represents how many MPC members voted to increase interest rates, the second number represents how many voted to decrease rates, and the third represents how many voted to hold rates. This is another high impact news event that creates extreme volatility in GBP pairs.
Monetary Policy Summary
Monetary policy summary is released monthly. If it sounds hawkish, it is usually good for the currency. A news event that causes GBP pairs to be volatile.
Official Bank Rate
Bank of England (BOE) along with the Monetary Policy Committee decides the official bank rate. This news event is scheduled monthly. Short term interest rates are a very important factor for the valuation of the currency. GBP pairs’ traders are to deal with this news event carefully.
The figure is released quarterly, about 85 days after the quarter ends. It is measured by the difference in value between imported and exported goods, services, income flows, and unilateral transfers during the previous quarter. This is considered a high impact news event for the GBP pairs.