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GBP/USD: Trading the British Preliminary GDP

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

  1. 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.
  2. Above expectations: 0.9% to 1.3%: An unexpected higher reading can push the pair above one resistance line.
  3. 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.
  4. Below expectations: -0.3% to 0.1%: In this scenario, GBP/USD could drop below one support level.
  5. 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.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.