British Preliminary 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.
Update: UK GDP +0.7% as expected – GBP/USD ticks up
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Friday at 8:30 GMT.
Indicator Background
There are three versions of British GDP, and Preliminary GDP is the earliest release and tends to have the most impact. Traders should pay close attention to the GDP release, as an unexpected reading could have a significant impact on the direction of GBP/USD.
GDP has been steady, with a strong gain of 0.9% in the Q2 reading. This edged above the estimate of 0.8%. The markets are expecting a drop in Q3, with an estimate of 0.7%. Will the indicator beat the forecast?
Sentiments and levels
Both the US and UK economies continue to improve, led by solid employment numbers. The markets are expecting rate hikes in both countries sometimes in 2015, but low inflation levels have eased pressure on the Fed and BOE to make a move. So, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.6310, 1.6250, 1.6131, 1.6006, 1.5909, and 1.5746.
5 Scenarios
- Within expectations: 0.6% to 1.0%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 1.1% to 1.4%: An unexpected higher reading can push the pair above one resistance line.
- Well above expectations: Above 1.4%: A surge in the reading would likely help the pound, and the pair could break a second line of resistance as a result.
- Below expectations: 0.1% to 0.5%: In this scenario, GBP/USD could drop below one support level.
- Well below expectations: Below 0.1%. A reading of zero or in negative territory could push the pair below a second support line.
For more on the pound, see the GBP/USD forecast.
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