British Preliminary GDP, one of the most important economic releases, 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 8:30 GMT.
Indicator Background
British Preliminary 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.
Final GDP in Q1 posted a gain of 0.6%, above the forecast of 0.5%. The estimate for Preliminary GDP in Q2 stands at 0.5%.
Sentiments and levels
The BoE surprised the markets by not lowering rates in July. However, the bank is widely expected to lower rates in August in order to cushion the economic fallout from Brexit. With speculation rising that the Fed could raise rates before the end of 2016, monetary divergence favors the US dollar. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.3426, 1.3276, 1.3142, 1.3064, 1.2902 and 1.2790.
5 Scenarios
- Within expectations: 0.2% to 0.8%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.9% to 1.3%: An unexpected higher reading can push the pair above one resistance line.
- Well above expectations: Above 1.3%: A surge in the reading could push the pound higher and the pair could break a second line of resistance as a result.
- Below expectations: -0.3% to 0.1%: In this scenario, GBP/USD could drop below one support level.
- Well below expectations: Below -0.3%. A very weak reading 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.