Category: GBP USD Forecast

GBP/USD Forecast July 21-25



GBP/USD showed slight losses for a second straight week as the pair slipped below the 1.71 line, closing at 1.7081. This week’s highlights are Retail Sales and Preliminary GDP. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.

British data looked sharp last week, but the pound failed to take advantage. CPI jumped to 1.9%, while unemployment claims fell sharply and the unemployment rate dipped to 6.5%. In the US, Janet Yellen testified on Capitol Hill, hinting that a rate hike could come earlier if inflation and employment numbers improve faster than expected. US housing and consumer confidence numbers were weak, while Unemployment Claims impressed.

Updates:

GBP/USD graph with support and resistance lines on it. Click to enlarge:  GBPUSD-Forecast-July21-28

  1. Public Sector Net Borrowing: Tuesday, 8:30. The public sector budget ballooned to GBP 11.5 billion last month, its highest since November. However, the figure beat the estimate of GBP 11.8 billion. The markets are expecting some improvement in the upcoming release, with an estimate of GBP 10.3 billion.
  2. 10-year Bond Auction: Tuesday, Tentative. Yields on 10-year bonds have come in at 2.82% over the past two releases, and no significant change is expected in this week’s release.
  3. CBI Industrial Order Expectations: Tuesday, 10:00. This report is based on a survey of manufacturers, and provides analysts with a snapshot of the health of the manufacturing sector. The indicator jumped to 11 points last month, crushing the estimate of 3 points. This was the indicator’s best showing since November. Another strong reading is expected in June, with the estimate standing at 9 points.
  4. MPC Asset Purchase Facility Votes: Wednesday, 8:30. Analysts closely monitor the voting breakdown of the MPC vote on QE, which is expected to be a unanimous 9-0 decision. A non-unanimous vote indicates some dissension by policymakers as to the desirable QE level.
  5. MPC Official Bank Rate Votes: Wednesday, 8:30. This decision is also expected to be a unanimous decision. A split vote would likely feed speculation about a rate hike by the BOE and affect the direction of GBP/USD.
  6. BBA Mortgage Approvals: Wednesday, 8:30. BBA Mortgage Approvals provide important data about the health of the housing sector. The indicator has been slipping throughout 2014, and dropped to 41.8 thousand last month. The markets are expecting a turnaround in June, with the estimate standing at 43.4 thousand.
  7. CBI Realized Sales: Wednesday, 10:00. CBI Realized Sales tends to show sharp movement, resulting in estimates that are well off the mark. Last month, the indicator posted a dismal reading of 4 points, nowhere near the estimate of 25 points. The markets are expecting much better news in June, with the estimate standing at 18 points.
  8. BOE Governor Mark Carney Speaks: Wednesday, 11:45. Carney will deliver remarks at a conference in Glasgow. A speech that is more hawkish than expected is bullish for the British pound.
  9. Retail Sales: Thursday, 8:30. Retail Sales, a key event, is the primary gauge of consumer spending. The indicator came in at -0.5% last month, matching the estimate. The markets are expecting some improvement in the upcoming release, with a forecast of +0.2%.
  10. Preliminary GDP: Friday, 8:30. Preliminary GDP, released each quarter, is the first version of GDP, and one of the most important economic indicators. It has been very steady in recent reading, and posted a gain of 0.8% in Q1, just shy of the estimate of 0.9%. The markets are expecting another gain of 0.8% in Q2.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.7121 and climbed to a high of 1.7191, breaking through resistance at 1.7180 (discussed last week). The pair then reversed directions, and dropped to a low of 1.7036. GBP/USD closed the week at 1.7081.

Live chart of GBP/USD:




Technical lines from top to bottom

We start with resistance at 1.7624, which has provided support since March 2006. This marked the start of a stellar rally by the pound, which went on to top the 2.11 level.

The next resistance line is 1.7465. This line has held firm since October 2008. 1.7375 is the next resistance line.

1.7180 was breached early in the week, as the pair pushed before retracting. It remains a strong resistance line.

1.7108 continues to be active in July, and has now been breached two weeks in a row. It recovered and remains a weak resistance line.

1.6989 is the first support level. It has some breathing room as the pair trades close to the 1.71 line.

1.6823 continues to provide strong support.

1.6684 is the next support line. It was an important resistance level in March and early April.

The final support level for now is the round number of 1.6600. It has remained intact since early April, which marked the start of a rally that saw the pound flirt with the 1.70 line.

I am neutral on GBP/USD.

Despite slight losses last week, the pound remains at high levels, and climbed close to the 1.72 line. However, solid British inflation and employment numbers failed to push the pound higher. Traders should keep a close eye on British Retail Sales and GDP, both of which are market-movers. US numbers were a mix last week, but market sentiment remains high regarding the US economy, and talk of an interest rate hike will only intensify as QE should be wound up in October.

Further reading:

GBP/USD Forecast July 14-18

GBP/USD Forecast July 14-18

The high-flying pound took a breather last week, as GBP/USD posted modest losses. The pair closed at the round number of 1.71. This week’s highlights are CPI and Claimant Count Change. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD. British Manufacturing Production surprised with a sharp drop, while NIESR

GBP/USD: Trading the British Manufacturing Production

GBP/USD: Trading the British Manufacturing Production

The British Manufacturing Production, a key indicator, provides analysts and traders with a snapshot of the health of the UK manufacturing sector. A reading which is higher than the market forecast is bullish for the pound. Update: GBP/USD loses 1.71 as manufacturing production plunges Here are all the details, and 5 possible outcomes for GBP/USD. Published

GBP/USD Forecast July 7-11

GBP/USD Forecast July 7-11

The high-flying pound continues to ascend, as GBP/USD gained over one cent last week. The pair closed at 1.7059. This week’s highlights are Manufacturing Production and the BOE interest rate and QE decisions. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD. US employment numbers sparkled last week,

GBP/USD Forecast June 30-July 4

GBP/USD Forecast June 30-July 4

GBP/USD was unchanged this week, as the pair continues to trade above the 1.70 level. The pair closed the week at 1.7019. This week’s highlights are the PMI releases. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD. US GDP for Q1 shocked the markets with a decline

GBP/USD Forecast June 23-27

GBP/USD Forecast June 23-27

GBP/USD remained at high levels this week, breaking above the 1.70 level and hitting its highest level since October 2008. The pair closed the week at 1.7009. This week’s highlights are testimony by Mark Carney before a parliamentary committee and Current Account. Here is an outlook for the main events moving the pound, and an updated technical analysis

GBP/USD Forecast June 16-20

GBP/USD Forecast June 16-20

GBP/USD gained about 150 points last week, as the pair came close to the key 1.70 line before closing at 1.6961. The upcoming week is busy, highlighted by CPI. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD. The pound had a banner Thursday, soaring about 170 points after

GBP/USD Forecast June 9-13

GBP/USD Forecast June 9-13

GBP/USD had an uneventful week, and was almost unchanged, as the pair closed just shy of the 1.68 level. This week’s highlights are Manufacturing Production and Claimant Count Change. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD. The news was positive in the US, as Non Farm Payrolls met expectations

GBP/USD Outlook June 2-6

GBP/USD Outlook June 2-6

GBP/USD lost 80 points on the week, as the pair closed at 1.6752. This week’s highlights are the PMI releases. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD. US Unemployment Claims bounced back with a strong release, and consumer confidence continues to trade at high levels. However, GDP surprised

GBP/USD Outlook May 26-30

GBP/USD Outlook May 26-30

GBP/USD showed some strong gains but was unable to consolidate and ended the week unchanged. The pair closed the week at 1.6829. The upcoming week has a very light schedule, with just three releases. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD. British Retail Sales improved sharply and