The Gross Domestic Product (GDP) indicator measures the production and growth of the economy. Analysts consider GDP one of the most important economic indicators, thus the publication of the British GDP can have an immediate effect on GBP/USD.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Wednesday at 9:30 GMT.
Indicator Background
British GDP figures are released on a quarterly basis, making the GDP indicator a very important one. The indicator provides analysts and traders with a snapshot of economic activity and the health of the economy.
GDP increased last month by 0.5%, slightly better than the market forecast. However, the markets are calling for a contraction of 0.1%, which would be the first negative reading since last January. Will the indicator prove the markets wrong, and stay in positive territory this month?
Sentiments and levels
UK economic indicators remained steady last week, and the pound rallied against the US dollar. If traders feel that no bad economic news is good news, the pound could continue to roll. Thus, the overall sentiment is bullish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5815, 1.57, 1.5629, 1.55, 1.54, 1.5360 and 1.5280.
5 Scenarios
- Within expectations: -0.4% to 0.2%: In this scenario, GBP/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 0.3% to 0.6%: A reading above expectations would be an indication of growth in the UK economy, and could push the pair above one resistance level.
- Well above expectations: Above 0.6%: An unexpectedly sharp rise in GDP could propel GBP/USD upwards, and two or more resistance lines could fall.
- Below expectations: -0.8% to -0.5%: A reading well into negative territory could push GBP/USD upwards, with one support level at risk.
- Well below expectations: Below -0.8%: A poor GDP reading would hurt the pound, and the pair could break two support levels or more.
For more on the pound, see the GBP/USD.