GBP/USD: Trading the British GDP October 2012 view

British  Gross Domestic Product (GDP) is a key release 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 Thursday at  8:30 GMT.

Indicator Background

British  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 September, GDP  posted its worst reading in over three years, as it declined by 0.7%. The markets are expecting a much  better result this month, with the estimate standing at 0.6%.  Will the GDP rebound in October and meet expectations?

Sentiments and levels

I am bullish on GBP/USD.

UK releases looked good last week, and employment and retail sales numbers were strong.  As well, there has been some improvement in US numbers, such as consumer sentiment, and further good news out of the US would be bullish for the pound. So, the overall sentiment is bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6122, 1.6060, 1.5992, 1.5930, 1.5805, and 1.5750.

5 Scenarios

1. Within expectations:  0.3% to 0.9%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 1.0% to 1.3%: An unexpected higher reading can push the pair above one resistance line.
3. Well above  expectations: Above 1.3%: An 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:  -0.1% to 0.2%: In this scenario, GBP/USD could drop below one support level.
5. Well below expectations: Below -0.1%. 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.