The total monetary value of all goods and services produced within a country in a given period - the broadest single measure of economic activity.
GDP is released quarterly by most major economies and is reported in three versions: the advance estimate (first flash, most market-moving, often revised significantly), the second estimate (preliminary revision), and the final reading. For G10 currencies, the advance GDP release is a high-impact event on the economic calendar that can shift pairs by 50–150 pips in minutes.
The relationship between GDP and currency direction is intuitive but lagged. Strong GDP growth relative to expectations and relative to other major economies attracts capital inflows - foreign investors buying bonds and equities denominated in that currency, which bids up its price. The Bank of England, Federal Reserve, and ECB explicitly reference growth data in their rate-setting deliberations; robust GDP tends to support a hawkish tilt, which strengthens the currency.
GDP components - consumer spending (typically 60–70% of developed-economy GDP), business investment, government spending, and net exports - each carry different market implications. Strong consumer spending accompanied by tight employment is particularly significant because it sustains inflationary pressure and rate expectations. Weak net exports (a deteriorating trade balance) may reflect currency strength pricing out exporters, which the central bank may factor into its outlook.
Because GDP is backward-looking (it measures the prior quarter's activity), forex traders frequently use leading indicators - PMI surveys, retail sales, and consumer confidence - as more timely proxies for the direction of the next GDP release.