Trading The UK Prelim GDP Q/Q Release, July 28, 2015

UK Prelim GDP is the most important of three GDP releases since it’s the most likely to surprise. With the last MPC minutes noting potential hawkish sentiment shift among MPC members, if today’s release were to surprise to the upside, we should see plenty of market reaction…

4:30am (NY Time) UK Prelim GDP q/q Forecast 0.7% Previous 0.4% DEVIATION: 0.3% (BUY GBP 1.0% / SELL GBP 0.4%)

The Trade Plan Since this is the first release of the second quarter GDP for 2015 (Q2 2015), 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 SELL GBP at 0.4% or worse, and BUY GBP at 1.0% or better.

Historically, if there is an 80% 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.

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: GBP/USD.

Outlook ScoreOutlook 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.

DefinitionPrelim 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.

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