UK GDP Preview: A last look at the pre-fear of a no-deal Brexit economy

• The final read for Britain's Q2 GDP is expected to confirm the early numbers. 
• Surprises are not uncommon in the final read, especially for the annual figure.
• Fear of a no-deal Brexit and the takeover of Brexit headlines came afterward.

The final read of UK Gross Domestic Product is due on Friday, September 28th, at 8:30 GMT. The last read is expected to confirm the OK growth rate of 0.4% and the mediocre annual rate of 1.3%. Contrary to the US, the second and third estimates of the economy do not change that much or do not change at all. 

Nevertheless, this applies to the quarterly measure more than the yearly one. The YoY numbers can change alongside the read of the Current Account figure for Q2 and modifications for data from previous quarters. A 1.3% annual growth rate is quite poor. A move up to 1.5% would be a positive surprise that can send the Pound higher. A downgrade of any sort could keep it depressed.

An unexpected change in the quarterly measure can have a more significant effect, but it is highly unlikely. A quarterly increase of 0.5% is already robust while a slide to 0.3% will be disappointing. 

All in all, the low expectations for any kind of change make a surprise quite impactful in general, but this time may be different due to Brexit.

Things have changed

During the second quarter, Brexit was not as prominent as it was in Q3. Those were the days before the Chequers plan when Brits geared up and saw the national football team reach the semi-finals in the World Cup. 

Fears of a no-deal Brexit began in Q3 and affected the real economy. We still do not have enough data for the current quarter, which ends quite soon. 

Another thing changed in Q3 related to Brexit: the reaction function of financial markets to any Brexit headline. The level of sensitivity is much higher, as we have recently seen. Michel Barnier, Dominic Raab, Theresa May, and Angela Merkel, to name a few, have a more significant impact than data that relates to a period that ended nearly three months ago. And this applies even if it is GDP - the broadest overview of the economy.

Conclusion

The GBP/USD will likely react to a surprise in the GDP figures. A surprise is more likely in the yearly number while a surprise in the quarterly figure is more likely. However, the data is becoming stale, and more importantly, Brexit took over the headlines. A move in the Pound may be sharp but shortlived. 

More: Brexit: May may surrender after the Conservative Conference, buying opportunity on GBP/USD?