British Second Estimate GDP indicator is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the pound.
Update: UK updated GDP: +0.3% – GBP/USD slides
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 released quarterly, and the GDP reports are highly anticipated by the market. An unexpected reading can have an immediate impact on the movement of GBP/USD.
The markets had their first look at GDP figures for Q1 with the release of Preliminary GDP in April, which showed a gain of 0.3%. This was short of the estimate of 0.5%. Little change is expected in the Second Estimate GDP release, with a forecast of 0.4%.
Sentiments and levels
Recent US data has been lukewarm, and the pound has taken advantage with strong gains in the month of May. Still, sentiment over the US economy remains strong, as Q2 is expected to be much stronger than Q1. In the UK, the recent British election results are good news for the pound, as the new majority government will have the political muscle to take steps to boost the UK economy. So, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5590, 1.5485, 1.5425, 1.5350, 1.5270 and 1.5080.
5 Scenarios
- Within expectations: 0.1% to 0.7%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.8% to 1.2%: A strong reading could send the pair above one resistance line.
- Well above expectations: Above 1.2%: The chances of such a scenario are low. Such an outcome would likely push GBP/USD upwards, and a second resistance level might be broken as a result.
- Below expectations: -0.5% to -0.1%: A contraction in GDP could cause the pair to drop and break one support level.
- Well below expectations: Below -0.6%. A sharp contraction in growth could push GBP/USD below a second support level.
For more on the pound, see the GBP/USD.
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