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The  British Preliminary  Gross Domestic Product (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.

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

Published on Wednesday 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. Traders should pay particular attention to this economic indicator as any unexpected reading could change the direction of GBP/USD.

The indicator has now posted a decline of 0.2% for two  consecutive readings. The markets are predicting no change in the  Q2 release. Another decline in GDP would signify  a sustained  decline in UK economic activity, which  could hurt the British pound. Will the  British Preliminary GDP bounce back into positive territory?

Sentiments and levels

GBP/USD has shown some strength recently, not including a drop at the end of last week following some poor UK data. The markets are very concerned over a host of  weak US releases, and the pound could benefit if the US economy continues to struggle.  As well,  are  some solid releases out  of the UK  would help the  pound  make inroads  against the dollar. Thus, the overall sentiment is bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5750, 1.5648, 1.56, 1.5521, 1.5415 and 1.5361.

5 Scenarios

  1. Within expectations: -0.5% to 0.1%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.2% to 0.5%: An unexpected higher reading can send the pair  above one resistance  line.
  3. Well above expectations: Above 0.5%: A surge in  GDP would push GBP/USD downwards, and a second  resistance line might be broken as a result.
  4. Below expectations: -0.9% to -0.6%: A lower GDP figure than predicted could cause the pair to climb and drop below one support level.
  5. Well below expectations: Below -0.9%. In this scenario, GBP/USD could break  a  second level of support.

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