British Preliminary 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.
Indicator Background
British Preliminary 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.
Preliminary GDP continues to improve, as the British economy steams ahead and economic releases point upwards. The Q3 reading posted a strong gain of 0.8%, matching the forecast.
Sentiments and levels
GBP/USD posted modest gains last week, but the pound’s steep rise against the dollar has slowed down. There is a strong likelihood that that the Federal Reserve will again taper QE this week, and such a move would likely bolster confidence in the US economy and provide a boost to the dollar. The BOE continues to reiterate that it has no plans to raise interest rates, as it does not want to see the pound gain ground too quickly. So, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.6990, 1.6705, 1.6600, 1.6475, 1.6343, and 1.6247.
5 Scenarios
Within expectations: 0.6% to 1.0%. In such a scenario, GBP/USD is likely to rise within range, with a small chance of breaking higher.
Above expectations: 1.1% to 1.4%: An unexpected higher reading can push the pair above one resistance line.
Well above expectations: Above 1.4%: A surge in the reading would push the pound higher and the pair could break a second line of resistance as a result.
Below expectations: 0.2% to 0.5%: In this scenario, GBP/USD could drop below one support level.
Well below expectations: Below 0.2%. A very weak reading could hurt the pound, and the pair could fall below a second level of support.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
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