British Second Estimate 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: UK GDP 0.4% q/q but only 2.0% y/y
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Thursday at 8:30 GMT.
Indicator Background
British Second Estimate GDP is a key economic indicator, and provides an excellent indication of the health and direction of the British economy. It follows the release Preliminary GDP, which was released in April. Traders should pay close attention to the GDP release, as an unexpected reading could affect the direction of GBP/USD.
Preliminary GDP in Q1 posted a gain of 0.4%, matching the forecast. No change is expected in Second Estimate GDP, with a forecast of 0.4%.
Sentiments and levels
With the Fed contemplating a rate hike in June, monetary divergence favors the US dollar. As well, the Brexit referendum continues to cause uncertainty in the UK, which is weighing on cable. So, the sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.4849, 1.4752, 1.4635, 1.4562 and 1.4413.
5 Scenarios
- Within expectations: 0.0% to 0.8%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.9% to 1.4%: An unexpected higher reading can push the pair above one resistance line.
- Well above expectations: Above 1.4%: A surge in GDP would likely push the pound higher and the pair could break a second line of resistance as a result.
- Below expectations: -0.4% to -0.8%: In this scenario, GBP/USD could drop below one support level.
- 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.