British Pound Outlook – June 29 – July 3 2009
Posted on June 28, 2009 by Yohay
Filed Under GBP USD British Pound Forecast | 2 Comments
The British Pound stuck to its range for another week, failing to breach the magical 1.6660 line. This week’s key British events: Nationwide HPI, Current Account, Manufacturing PMI, Services PMI and American Non-Farm Payrolls could well shake the Pound. Here’s an outlook for this week’s 5 key events in the British Pound + a technical analysis for GBP/USD.
- Nationwide HPI: It’s published on Tuesday at 6:00 GMT, after being delayed from last week. Although not the first house price index, this is an accurate one. The British real estate sector has skyrocketed during the good years, and plunged in this crisis, accelerating the recession. After rising by 1.2% last month, it’s expected to turn negative again, and fall by 0.4%.
- Current Account: Britain’s current account usually shows a deficit, and the first quarter of 2009 isn’t different. At least it’s expected to squeeze down, and this might help the Pound. The deficit is predicted to fall from 7.6 to 6.5 billion. It’s published on Tuesday at 8:30 GMT.
- Manufacturing PMI: Purchasing Manager’s Index shows future expectations for the manufacturing sector. A figure below 50 means contraction. The figure has been below 50 for over a year, but has advanced in the last three months. Also now, it’s predicted to rise from 45.4 to 46.3. This will surely shake the Pound. Published on Wednesday at 11:30 GMT.
- Non-Farm Payrolls: On the first week of the month, the king of forex cannot be avoided…This super-major American figure shakes the whole world. After a surprise last time, when “only” 345K jobs were lost, NFP is predicted to take one step backwords and show a fall of 375K jobs. Strong movements are expected also in the British Pound. It’s published this week on Thursday at 12:30 GMT.
- Services PMI: The complementary figure for Manufacturing PMI is in the services PMI. Here, the purchasing managers show a more positive attitude in the survey. Services PMI surprised last month by jumping above the 50 line, hitting 51.7. This good momentum is expected to continue, by staying at the same score. Published on Friday at 8:30 GMT.
GBP/USD Technical Analysis
The British Pound continued its range trading last week, and it certainly marked the borders: it fell as low as 1.62, and went as high as 1.66, alittle lower than the major resistance line of 1.6660. This can be seen in the graph below:
This range trading has been going on for three weeks. The Pound fails to cross the major resistance line of 1.6660 which was a peak at the end of October. Looking down, 1.62 isn’t that strong – it was formed in the last weeks, but seems serious.
Non-Farm Payrolls could temporarily move GBP/USD below or above this range during the release. Naturally, surprising British releases or another huge surprise in NFP could make the pair break this range for the long term.
After closing the week at 1.6517, the Pound is close to the high end of the range, but anything can happen…
Have a great week!
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Jun-26, 2009
Stuck in a Range, but Look Closer
Well the GPD/USD has been stuck in a range. A range from 1.62 at a low to 1.66 at a high.
Taking a closer look, it looks like a head and shoulders.. Actually it looks like a “W”.
On June 19th then it reach 1.6560. Then it plunged to 1.62. close to the 23rd.. Then it rose to 1.66 to for the head. Next it fell to 1.6231 and rose again to 1,6560 on the 26th before the market closed on Friday. And then a slight turn downward before the day was over. (see GPD/USD 2 hour chart),
Now the downward movement of the left shoulder should take place, probably on the European session on Monday.
Most analyst are voicing that the GPD/USD is Bullish that is contray to my technical analysis.
Will it take place. I do not know. According to all the courses I took .it will happen. I have seen things happen in the FOREX market recently that mystify me.
So I will wait for the fundamental data and analyze the chart data before I move.
Ted Wood
I agree that the general mood for GBP/USD is bullish. However I like Ted feel that we will see a significant yet gradual fall. My reason for making this suggestion lie with the fact that the CIA Factbook suggests the external debt for the UK is at $ 10,450 billion. The external debt for the US is $14,580 billion with an economy six times larger.
With this level of external debt I do not see how the UK economy can revitalise itself. Many are talking about a return to growth towards the end of the year which will mean interest rates will rise. A rise in interest rates will only exacerbate the problem with the UK and dampen any potential growth.
In other words I see the UK entering a period of a ‘lost generation’. There will be next to no growth as all surplice income is used to fund the interest payments due on the external debt. The Bank of England will have to maintain the Quantitative Easing by keeping interest rates artificially low and ‘printing money’. All of this will lead to a decline in the value of cable. First it will be parity with the Euro followed by parity with the Dollar. A real pessimist would suggest parity with the Yen!!!!!