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- Preliminary U.K. 4Q GDP to Expand an Annualized 2.5% Amid Lowest Print Since 4Q 2013.
- Private Consumption to Climb 0.7% - Fastest Pace of Growth Since 3Q 2014.
Trading the News: U.K. Gross Domestic Product (GDP)
An upward revision in the U.K. 1Q Gross Domestic Product (GDP) print may heighten the appeal of the British Pound and spur a near-term rebound in GBP/USD as signs of a stronger recovery raises the Bank of England’s (BoE) scope to normalize monetary policy sooner rather than later.
What’s Expected:
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Why Is This Event Important:
A marked uptick in the growth rate may spur a growing dissent within the Monetary Policy Committee (MPC) as the central bank remains on course to normalize monetary policy, and we may see a greater number of BoE officials prepare U.K. households and business for higher borrowing-costs as the economy gets on a firmer footing.
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Expectations: Bullish Argument/Scenario
| Release | Expected | Actual |
| Construction Output s.a. (YoY) (MAR) | 1.1% | 1.6% |
| ILO Unemployment Rate (3M) (MAR) | 5.5% | 5.5% |
| Industrial Production (MoM) (MAR) | 0.0% | 0.5% |
The pickup in business outputs along with the ongoing improvement in the labor market may stoke a larger-than-expected upward revision in the growth rate, and a positive development may produce a bullish reaction in the sterling as it boosts interest rate expectations.
Risk: Bearish Argument/Scenario
| Release | Expected | Actual |
| Trade Balance (MAR) | -2.400B | -2.817B |
| Mortgage Approvals (MAR) | 62.5K | 61.3K |
| Retail Sales inc. Auto Fuel (YoY) (MAR) | 5.4% | 4.2% |
However, the widening trade deficit paired with the ongoing slack in private-sector activity may drag on the growth rate, and a dismal GDP figure may further delay the BoE’s normalization cycle especially on the back of the uncertainties clouding the outlook for fiscal policy.
How To Trade This Event Risk(Video)
Bullish GBP Trade: U.K. 1Q GDP Expands Annualized 2.5% or Greater
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Need to see green, five-minute candle following the GDP report to consider a long trade on GBP/USD.
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If market reaction favors a long sterling trade, buy GBP/USD with two separate position.
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Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
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Move stop to entry on remaining position once initial target is hit; set reasonable limit.
Bearish GBP Trade: Growth Rate, Personal Consumption Falls Short of Market Forecast
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Need red, five-minute candle to favor a short GBP/USD trade.
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Implement same setup as the bullish British Pound trade, just in the opposite direction.