Search ForexCrunch

British Second  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: It’s 0.5% as expected – GBP/USD still struggles

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

Published on Friday at 9:30 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. It follows Preliminary GDP, which was released in October. Traders should pay close attention to the GDP release, as an unexpected reading could affect the direction of GBP/USD.

Preliminary  GDP in Q3 posted a gain of  0.5%, close to forecast of 0.6%. Little change is expected  from Second Estimate  GDP, which  stands at 0.5%.

Sentiments and levels

The guessing game over the Fed’s plans continues, as many analysts are predicting the Fed will make a rate move in December. BOE head Mark Carney stated that  interest rates  will  remain low,  which  could  weigh on the pound, which is  struggling to stay above the symbolic 1.50 line.  So, the overall sentiment is  bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5341, 1.5269, 1.5163, 1.5026, 1.4856 and 1.4752.

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  GDP 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.