The impact of GDP on the exchange rate.

GDP, or Gross Domestic Product, is one of the most important economic indicators characterizing a country's economic performance. GDP is the total amount of goods and services produced domestically, expressed in monetary terms.

The higher the value of this indicator, the more optimistic the forecasts for economic growth in a given country.

Analysis of GDP dynamics, which is compared with values ​​from previous years, is particularly important.

Positive GDP dynamics serve as the basis for strengthening the national currency and play a significant role in attracting foreign investment. For this reason, some countries use certain methods to artificially inflate GDP.

GDP can be inflated by changing the calculation method or by including previously unaccounted components. For example, the United States successfully altered its GDP by including revenues from the film industry and research expenditures.

Therefore, forecasts of this indicator cannot be based solely on the actual state of macroeconomic developments; a country's GDP can be artificially adjusted in one direction or another to manipulate the exchange rate or create the illusion of economic growth to attract investors.

GDP and Forex trading.

As noted above, a positive change in Gross Domestic Product almost always leads to a strengthening of the national currency . This is because an increase in the quantity of goods produced theoretically increases the purchasing power of the currency. Accordingly, a decrease in GDP compared to previous reporting periods leads to a depreciation of the exchange rate.

You can find out in advance when a country's GDP data will be released using the Forex calendar , which also displays analysts' forecasts of possible results, which also influences the exchange rate.

The release of the news itself is usually published in the news feeds on the website of a Forex dealing center .

To determine the impact of a change in GDP on the exchange rate of a given currency, simply compare previous data releases with changes in currency pair charts.