THE UK ECONOMY

UK ECONOMIC INDICATORS

Fast facts of the economy of the United Kingdom

-The United Kingdom (UK) is the 5th economy in the world with a nominal GDP of 2.3 trillion dollars.
-As other developed countries in the world, the UK is a country oriented towards the service economy (mostly financial services: insurance, banking, etc.)
-UK has very closely with the eurozone, exports and imports among them are around 50% of the total of the trade balance of UK.

-The Bank of England (BoE) is responsible for UK monetary policy. The main objective is to maintain stability of prices (inflation at comfortable levels).
-Has there been a controversial debate about whether UK should join the eurozone (countries that adopt the EUR as local currency). Arguments against: the current policies have been successful in the new global economy, they will not have total control of monetary policy if unite, arguments against: the power the ECB would increase dramatically.
-The pound sterling (GBP) is between the currencies more liquid in the world. Given its high rate of interest, operators and investors are interested much in this currency to perform "carry trade" operations (to earn interest), even when there are other currencies with higher interest rates.

UK important economic indicators

Rate of interest
The BoE has meetings every month to announce its decision on interest rates. Currently, the GBP is the best choice to make "carry trades" (even though there are other pairs with higher interest rate), this liquidity. The most widely used pair for this is the GBP/JPY. For this reason, operators and investors put attention in this announcement.
An increase in the interest rate, the GBP is often seen.
A reduction in the interest rate, the GBP tends to depreciate.
When there is no change in the interest rate can be taken as bullish or bearish sentiment depending on the circumstances.
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Gross Domestic Product (GDP)
The GOP shows the overall growth of the economy of the UK.
In a good number, the GBP tends to gain value.
In a bad number, the GBP tends to lose value.
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Trade balance
The trade balance measures the difference between exports and imports from the UK. The main trading partner of UK is the eurozone, but by country, US continues to be the first partner.
The GBP tends to move up at a good number.
The GBP tends to move downward at a bad number.
Other related important announcement is the scale commercial non-EU, which measures the ratio of exports and imports with countries outside the eurozone.

Consumer Price Index (CPI)
The ICC is the main element of inflation. This is the way in which many operators and investors to measure inflation and therefore the increase/decrease of the purchasing power of the GBP.
For the UK, usually:
A low number tends to increase the value of the GBP
A high number tends to decrease the value of the GBP
Another measurement of the CPI for the UK is the Core CPI measures the same change of prices that excludes two of its more volatile components: food and energy.

The BoE minutes
In the minutes of the BoE, policy makers share their vision and reasons why took the decision of change/no change in the rate of interest.
Always the investors and operators focus on the vision that policy makers have about future economic conditions, because they already gave the announcement of the interest rate. Also try to find evidence of whether in the future think increase or decrease rates of interest in the next announcement.
For example, if they mention "the mortgage market is in a clear expansion" can create inflationary pressures, what you can do to increase the interest rates in its next meeting.