GBP/USD: Trading the British Preliminary GDP Oct 2013

British Preliminary GDP, published each quarter, measures the production and growth of the UK economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is higher than the market forecast is bullish for the pound.ov

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

Published on Friday at 8:30 GMT.

Indicator Background

The British Preliminary GDP is a key economic indicator, and provides an excellent indication of the health and direction of the UK economy. Preliminary GDP is one of three versions that are released and it considered the most important version. Traders should pay particular attention to this economic indicator as any unexpected reading could change the direction of GBP/USD.

GDP in Q2 looked solid, as the indicator posted a gain of 0.7%, after an initial read of 0.6%.. The markets are expecting an improvement in Q3, with an estimate of 0.8%. Will the indicator meet or beat this rosy prediction?

Sentiments and levels

The pound  continues to post gains at  the expense of  the dollar, and got a  boost from a weak Non-Farm  Payrolls report earlier this week.  We are unlikely to see any QE before next year, and this will weigh on the dollar. Over in the UK, the economy is picking up and even the cautious BOE is calling the economic recovery “robust”. So, the overall sentiment is  bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6474, 1.6343, 1.6247, 1.6125, 1.6000 and 1.5936.

5 Scenarios

1. Within expectations: 0.4% 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 1.2%: An unexpected higher reading can send the pair above one resistance line.
3. Well above expectations: Above 1.2%: A surge in GDP would push GBP/USD upwards, and a second resistance line might be broken as a result.
4. Below expectations: 0.0% to 0.3%: A lower GDP figure than predicted could cause the pair to climb and drop below one support level.
5. Well below expectations: Below 0.0%. If GDP drops into negative territory, GBP/USD could break a second level of support.

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

To follow this event live:  [do action=”calendar-event” eventid=”cafae3e0-3d9a-43f4-876c-ec7490465d3e”/]