Can GDP boost pound?

Office of National Statistics (ONS) will release final reading of third quarter GDP estimate. Pound traders are awaiting the release to take further cue from.

Past trends -

• UK GDP growth stands highest among developed economies, however that has not been sufficient enough to push pound higher as inflation remained low and services remain the only sector to have grown above pre-crisis level.

• GDP growth reached highest level in second quarter of 2014, reaching 3.2% growth on yearly basis. Since then growth has somewhat waned. In second quarter of 2015, growth was 2.4% y/y. Flash reading suggested it could be weaker in third.

Expectations today -

• Today's reading is expected to show growth at 0.5% q/q and 2.3% y/y.

Impact -

• Without any big upside surprise of at least 0.2-0.3%, Pound is unlikely to change course. Bank of England (BOE) has severely dented its rate hike outlook.
   
• Since Dollar leg is exceptionally strong, Pound is likely to drift lower against Dollar and any bounce back likely to encounter sellers. Even Euro might gain further against Pound.
   
• Active call - Sell Pound @ 1.52, 1.54 with target around 1.49, 1.475, 1.445, 1.425 and stop loss at 1.58. First target for this call is reached and it is likely to hit next few targets. Pound is currently trading 1.485 against Dollar.