GBP/USD: Trading the Revised British GDP

British Revised Gross Domestic Product (GDP) is a key economic 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.

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

Published on Thursday at 8:30 GMT.

Indicator Background

British Revised 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.

The Revised British GDP  has reeled off negative readings for three consecutive quarters, pointing to serious difficulties in  the UK economy.  However, the markets are expecting a rebound in Q3, with an estimate of a 1.0% gain. Will the indicator meet or beat the positive forecast?

Sentiments and levels

I am bullish on GBP/USD.

After a two-month slide, the pound finally reversed its downward trend against US dollar last week. Will the pair continue to push higher? The UK posted some  positive data last week, and the bumpy US recovery seems to headed in the right direction lately. If there is progress in the looming fiscal cliff crisis in the US, investors may show more of an appetite for non-US purchases, and the pound could make further gains against the greenback. So, the overall sentiment is bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6342, 1.6247, 1.6122, 1.6060, 1.5992 and 1.5930.

5 Scenarios

1. Within expectations: 0.7% to 1.3%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 1.4% to 1.7%: An unexpected higher reading can push the pair above one resistance line.
3. Well above expectations: Above 1.7%: An surge in the reading would likely help the pound, and the pair could break a second line of resistance as a result.
4. Below expectations: 0.3% to 0.6%: 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.