GBP/USD: Trading the British Preliminary GDP Apr 2015

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.

Update:  UK GDP only +0.3% – GBP/USD falls

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

Published on Tuesday 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 came in at 0.6% in  Q4, within expectations.  Little change is expected in Preliminary GDP for Q1, with the estimate standing at 0.5%.

Sentiments and levels

With the US dollar  losing  over 500 points in  just two weeks, a  correction  may be in order. Despite some weak US numbers in recent weeks, analysts expect a strong spring, and market sentiment remains positive about the US economy. The pound is back above 1.50, but uncertainty about the upcoming UK election could shake up the pair, and falling inflation remains a serious worry. So, the overall sentiment is  bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5459, 1.53, 1.5215, 1.5114, 1.5008, and 1.4813.

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 would  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.

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