Revised GDP q/q, or better known as the 2nd quarterly GDP release, is going to be the focus today. With possible better than expected figures scheduled to be released today, market could be looking to BUY GBP ahead of this release… Here is the forecast:
4:30am (NY Time) UK Revised GDP q/q Forecast 0.3% Previous 0.2%
ACTION: GBP/USD BUY 0.6% SELL 0.0%
Revised GDP q/q from UK, is defined as “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.” GDP is the basically direct measurement of the economy, and a stronger GDP means that the central bank will more likely raise interest rate as better economy usually brings higher inflationary pressure…
Since this is the second release of the 4th quarter GDP, we’re not likely to get a huge surprise as most 2nd releases are pretty much inline. However, judging from the expected release of 0.3%, which is already an upward revision from the Prelim Release (first quarterly GDP release) last month, some pre-buying or support in the Sterling should take place prior to the release; considering the current market sentiment, we could more of a consolidation of GBP from the recent exaggerated sell-off.
Our surprise factor is the same usual one of 0.3% as we’ll look to possibly SELL GBP/USD at 0.0% or worse, and BUY GBP/USD at 0.6% or better. Historically, there is a 80% of chance if our S. Factor is hit, the market will move up to 50~70 pips within the hour as GDP is a very high impact report.
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