GBP/USD: Trading the British GDP (second release)

[do action=”calendar-event” eventid=”cafae3e0-3d9a-43f4-876c-ec7490465d3e”/]British Gross Domestic Product (GDP) is  considered  one of the most important economic indicators  and is published each quarter. GDP measures production and growth of the economy, and is considered by analysts as one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the pound.

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Wednesday at 9:30 GMT.

Indicator Background

British Secondary GDP is a key economic indicator, and provides an excellent indication of the health and direction of the British economy. Traders should pay close attention to the GDP release, as an unexpected reading could affect the direction of GBP/USD.

In Q3, Secondary GDP looked sharp, climbing by 1%. However, the markets are expecting a much  weaker  result for Q4,  with the estimate standing at -0.3%.  Preliminary GDP  for Q4 was also weak, posting a decline  of 0.3%. Will the indicator surprise the markets and remain in positive territory?

Sentiments and levels

I am bearish on GBP/USD.

The pound has proved no match for the US dollar and has lost a staggering 11 cents since the beginning of the year. The UK economy continues to stumble, and a credit rating downgrade last week has only worsened matters. The pound has not been able to stem the steep decline, and we could see the downward momentum continue. So, the overall sentiment is bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5361, 1.5282, 1.5189, 1.5061, 1.5010 and 1.4896.

5 Scenarios

1. Within expectations:  -0.6% to 0.0%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 0.1% to 0.4%: An unexpected higher reading can push the pair above one resistance line.
3. Well above expectations: Above 0.4%: A surge in the reading would likely help the pound, and the pair could break a second line of resistance as a  result.
4. Below expectations:  -1.0% to -0.7%: A weak reading could result in GBP/USD dropping below one support level.
5. Well below  expectations: Below -1.0%. A  reading deep in negative territory  could hurt the  pound, and the pair could fall below a second level of support.

For more on the pound, see the GBP/USD forecast.

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