This report is released monthly, in the first week, usually the first business day.
The report is released at 4:30 AM Eastern Time US, by the Charter Institute of Purchasing and Supply (CIPS).
Since this report is a leading indicator of the U.K.’s economic health based upon a survey of Purchasing Managers – foreign currency traders pay particular attention when the report is scheduled for release.
Many online FOREX Web Sites have an Economic Calender set up for their visitors use – these calenders will show the report, date, time, what the result of the last report was and a prediction of what the report might be.
It is the difference of prediction and actual report that holds the attention of traders!
If the actual report is different from the prediction, the traders will scramble to to take advantage – whether it be to maximize gain or to minimize losses.
At times, the previous report may be revised at the same time, which may have an effect on the market!
Traders who watch this Index will make a trade, or not, depending upon the result of the report – which will come out in one of 3 ways:
- It will come out as predicted, in which case it will have already been figured into the market and very little will happen, movement wise, in the currency market .
- It will come out higher than predicted, if far enough off the mark, catching the market (traders) by surprise and creating a mad scramble to adjust. (This event could mean that the economy may be improving, therefore, the GBP may become more valuable – thus the volatile movement of the currency market the first minute or 2 of the report release)
- If the report comes out lower than predicted and far off the mark, then the currency traders are in a mad scramble to adjust, only in the opposite direction than before. (This event could mean that the economy may be declining therefore, the GBP may become less valuable – thus the volatile movement of the currency market the first minute or 2 of the report release)
Naturally, the volatility produced by the unpredicted outcome of the report only affects certain curancy pairs – some more than others.
The 4 currency pairs that I have recorded since March of 2008 for this particular Fundamental Announcement are: EUR/GBP – GBP/USD – GBP/JPY and GBP/CHF.
The GBP/USD appears to be the most active of all the above mentioned currency Pairs – inspite of the Fundamental Announcement coming out during the European Market. Sometimes the other currency pairs witness a fair move, but nothing like the GBP/USD.
