GBP/USD: Trading the U.K. GDP Report (April 25, 2013)

Perhaps the release of the U.K. GDP report for Q1 2013 will be the biggest market catalyst for today as this could send GBP/USD above the trend line or all the way back down to 1.5000. The report would confirm if the U.K. entered another technical recession for the third time in five years if it comes in negative. Analysts are expecting a 0.1% uptick to follow the 0.3% drop in Q4 2012, but the odds are tilted to the downside as the cold weather in January and March might’ve taken off a huge chunk of growth.

A straddle play could be your setup if you’re not biased in any direction and would just rather catch the overall momentum. The pair could make a strong break below the 1.5300 handle if the report misses expectations or it could rally above the 1.5350 minor psychological resistance if it comes in strong.

This report typically triggers a lot of volatility for the pound, so it make sense to have a wide enough stop of at least 50 pips to give the trade enough breathing room.

By Kate Curtis from Trader's Way