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British Preliminary Gross Domestic Product (GDP) is  considered one of the most important  economic indicators. It is published  each quarter, which magnifies its impact.  A reading which is  higher 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 Preliminary GDP is a key economic indicator, and provides an excellent indication of the health and direction of the British economy.  There are three versions of GDP, and  Preliminary GDP is released the earliest,  and hence  has the most impact.  Traders should pay close attention to the GDP release, as an unexpected reading could affect the direction of GBP/USD.

The GDP reading in Q1 posted  a gain of 0.3%, which beat the estimate of 0.1%.  The markets are expecting a better reading  for Q2, with an estimate of 0.6%. Will the indicator  meet  or beat this prediction?

Sentiments and levels

The British  pound is enjoying a very strong run against the retreating US dollar, gaining about  five cents in the past two weeks. Will this impressive rally continue or run out of steam? Market sentiment  remains  much more positive about the US economy than the British economy, and US releases have generally been better than the data we’re seeing out of the UK. We could see a correction if British numbers fail to meet market expectations. So, the overall sentiment is  bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5648, 1.5550, 1.5484, 1.5350, 1.5258 and 1.5196.

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 1.4%: An unexpected higher reading can push the pair above one resistance line.
  3. Well above  expectations: Above 1.4%: 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 poor release  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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