How to trade the UK GDP with GBP/USD

The quarterly UK GDP report provides a broad overview of the economy and moves the Pound.
The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
The GBPUSD moved, on average, ten pips in the 15 minutes after the data release and 28 pips in the following 4 hours

Yohay Elam FXStreet

Buying GBP/USD Scenario

Tradable Positive Trigger: +1.7439 deviation (0.5778%) [BUY Pair]
Key Resistance Level: 1.2975

This time, if it comes out at higher than expected with a relative deviation of 1.7439 or higher (0.5778 or higher in actual terms), the pair may go up reaching a range of 51 pips in the first 15 minutes and 114 pips in the following 4 hours.

1.2920 provided support to the pair in early August. It is followed by 1.2975 which capped a recovery attempt around the same time. Further up, 1.3050 was a peak in early August.

Selling GBP/USD Scenario

Tradable Negative Trigger: -1.59 deviation (0.01%) [SELL Pair]
Fundamental Support Level: 1.2840

If it comes out lower than expected at a relative deviation of -1.5939 or less (0.2374 or lower in actual terms), the GBPUSD may go down reaching a range of 34 pips in the first 15 minutes and 83 pips in the following 4 hours.

1.2840 was the low point on August 8th and the lowest in 11 months. 1.2765 was a swing low back in August 2017. Much lower, 1.26 provided support in June 2017.

GBP/USD Levels on the Chart

More data

The first release of quarterly Gross Domestic Product always has an outsized impact on the Pound. The publication for Q2 consists of a novelty: it is the first time the quarterly and monthly figures are published together. Moreover, it is the initial update on the economy after the recent dovish hike from the Bank of England.

More: UK GDP Preview: Forecast of Q2 GDP pickup set to ease pressure off Sterling

In the last five releases, the GBPUSD moved, on average, ten pips in the 15 minutes after the data release and 28 pips in the following 4 hours. The previous publication had a surprise of 0.98058 regarding relative deviation, and the GBPUSD reached a 13 pip range in the first 15 minutes and a range of 32 pips 4 hours after that.

Follow the publication of the figure on the economic calendar. Watch out for the data from the Market Impact tool, projecting the potential price changes according to the deviation. Here is the Market Impact Studies Users Guide.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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