UK Prelim GDP is the most important of three GDP releases since it’s the most likely to surprise. With market already bracing for the impact from Brexit, today’s release may provide a false reading as the real impact will probably come in October… However, I’d still be looking to trade if we get our tradable deviation, but more towards the selling direction.
4:30am (NY Time) UK Prelim GDP q/q Forecast 0.5% Previous 0.4%
DEVIATION: 0.3% (BUY GBP 0.8% / SELL GBP 0.2%)
The Trade Plan
Since this is the first release of the 2nd quarter GDP for 2016 (Q2 2016), we´re likely to get a huge reaction if we get a surprise today, as most first releases are what the market looks to. Considering the recent positive trend in the economic data, we may get a strong surprise release today.
However, we´ll still be looking to trade the release using our after news retracement method. Our surprise factor is around 0.3% as we´ll look to possibly 8SELL GBP at 0.2% or worse, and BUY GBP at 0.7% or better.
Historically, if there is a 80% of chance that our S. Factor hits, the market will move up to 50~70 pips within the hour as GDP is a very high impact report.
For more information on my news trading methods: https://www.currencynewstrading.com/how-to-get-started-with-news-trading/
I’d recommend to use the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: GBPUSD.
Outlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.
Prelim 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…