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British GDP is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. Thus, publication of British Secondary GDP could have a significant impact on the movement of GBP/USD. A reading which is better than the market forecast is bullish for the pound, especially after the first release exceeded expectations and showed that the UK avoided a triple dip recession.

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

Published on Thursday at 8:30 GMT.

 Indicator Background

GDP is released quarterly, and provides an excellent indication of the health and direction of the economy. Traders should pay particular attention to this economic indicator and treat it as a market-mover.

British Secondary GDP has looked weak in recent readings, with four of the past five quarters posting declines. The markets are anticipating a turnaround in Q1, with an estimate of 0.3%, confirming the first release. Will the indicator meet or beat the market prediction?

Sentiments and levels

The markets  remain  pessimistic about the prospects of the British economy.  This was  underscored by  the fact that  positive UK employment numbers last week failed to prop up the pound,  which continues  to dive – the  currency has shed four  cents  against the dollar in May. The plunge in retail sales doesn’t help either. We could see the pound  move closer  to the 1.50 level, especially if US numbers rebound this week. So, the overall sentiment is bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5416, 1.5258, 1.5189, 1.5061, 1.5010 and 1.4896.

5 Scenarios

  1. Within expectations: 0.3% to 0.6%: In such a case, the  pound is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.6% to 0.9%: An unexpected higher reading can send GBP/USD  above one resistance line.
  3. Well above expectations: Above 0.9%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -0.1% to 0.2%: A  weaker reading than forecast  could push GBP/USD below one level of support.
  5. Well below expectations: Below -0.1%: Another decline by GDP will further undermine confidence in the UK economy, and the  pound could fall and could break a second support level.

For more about the pound, see the  GBP to USD forecast.

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