Category: GBP USD Forecast

GBP/USD Forecast Jan. 26-30 2015



The British pound sustained sharp losses last week, as GBP/USD closed the week below the 1.50 level. This was the first time the pair has slipped below this symbolic level since July 2013. This week’s major event is Preliminary GDP. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

The pound has had a miserable January, losing over 500 points against the US dollar. Last week, the BOE voted unanimously to hold interest rates, reflective of the low inflation environment in the UK. Retail Sales was better than expected, but this didn’t help the ailing pound, which has dropped below the 1.50 line. In the US, Unemployment Claims disappointed and Existing Home Sales missed expectations.

Updates:

GBP/USD graph with support and resistance lines on it. Click to enlarge:

GBPUSD_Forecast Jan.26-30.

  1. BBA Mortgage Approvals: Monday, 9:30. This is an important gauge of demand in the UK housing sector. The indicator has been on a downtrend for five months, dropping to 36.7 thousand in December. This was slightly below the forecast of 37.3 thousand. No change is expected in the upcoming reading.
  2. Preliminary GDP: Tuesday, 9:30. GDP, which is released every quarter, is the major event of the week. The indicator edged lower to 0.7% in Q3, matching the estimate. The downward trend is expected to continue in the Q4 reading, with an estimate of 0.6%.
  3. Nationwide HPI: Thursday, 7:00. Housing inflations indicators are excellent indicators of activity in the housing sector. The index dropped to 0.2% in December, short of the estimate of 0.4%. The markets are expecting a stronger reading in the January reading, with an estimate of 0.4%.
  4. CBI Realized Sales: Thursday, 11:00. This indicator is an important gauge of consumer spending, an important engine of economic growth. The indicator jumped to 61 points in December, crushing the estimate of 30 points. The markets with be hoping for another strong performance.
  5. GfK Consumer Confidence: Thursday, 12:05. Consumer confidence has been steadily losing ground, slipping to -4 points in December, which points to pessimism on the part of the UK consumer. Another decline is expected in the January reading, with an estimate of -2 points.
  6. Net Lending to Individuals: Friday, 9:30. The demand for credit is linked to consumer spending, as increased borrowing usually translates into higher spending. The indicator improved to GBP 3.2 billion in December, its highest level in four months. Little change is expected in the upcoming reading.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5141 and climbed to high of 1.5212. The pair then reversed directions, breaking below support at 1.4978 (discussed last week) and touching a low of  1.4951. GBP/USD closed the week at 1.4978.

Live chart of GBP/USD:




Technical lines from top to bottom

With the pound losing ground last week, we begin at lower levels:

1.5416 was an important support line in June 2013, at which time the pound broke through and continued to slide and fell below the 1.49 line.

1.5290 is the next resistance line.

1.5114 has reverted to a resistance line following strong losses by the pound. This line had held firm since August 2013.

1.5008 has also switched to a resistance role, but is a weak line and could see action early in the week.

1.4813 marked the start of a pound rally in July 2013 that saw GBP/USD climb above 1.61.

1.4752 has held firm since May 2009.

1.4562 is the final support level for now. It has provided support since November 2008.

I am bearish on GBP/USD.

With inflation levels continuing to falter in the UK, the markets are no longer sure about a rate hike by the BOE. In the US, the Fed will release its statement, and a rate hike sometime during the year remains on the table. This divergence favors the US dollar, which is also benefitting from the strong US economy.

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Further reading:

GBP/USD Forecast January 19-23 2015

GBP/USD Forecast January 19-23 2015

The British pound showed strong movement in both directions, but GBP/USD closed the week almost unchanged. The pair closed at 1.5150. This week’s major events are Claimant Change and Retail Sales. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. Inflation levels continued to drop in December,

GBP/USD Forecast Jan. 12-16 2015

GBP/USD Forecast Jan. 12-16 2015

The British pound continues to slide, as GBP/USD fell for a fourth straight week. The pair lost about 140 points, closing at 1.5146. The pound is now at its lowest level since July 2013. This week’s major event is CPI. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. The health of the UK

GBP/USD Forecast January 5-9 2015

GBP/USD Forecast January 5-9 2015

The British pound tumbled on Friday, losing 240 points to the US dollar. The pair closed the week at 1.5314, its lowest level since August 2014. This week’s highlights are PMIs and Manufacturing Production. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. The pound plunged on Friday, as Manufacturing PMI missed expectations and

GBP/USD Forecast Dec. 29 – Jan. 2

GBP/USD Forecast Dec. 29 – Jan. 2

The British pound continued its downward trend last week, as GBP/USD lost about 80 points last week. The pair closed the week at 1.5617. This week’s highlight is Manufacturing PMI. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. In the US, the final read of GDP for Q3 was excellent, with a rate of

GBP/USD Forecast Dec. 22-26

GBP/USD Forecast Dec. 22-26

The British pound had a tough week, as GBP/USD lost about 100 points. The pair closed the week at 1.5617. The upcoming week is very quiet, highlighted by Current Account. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. Last week’s highlight was the highly-anticipated Federal Reserve policy statement. Market analysts noted

GBP/USD Forecast Dec. 15-19

GBP/USD Forecast Dec. 15-19

The British pound posted strong gains last week, as GBP/USD climbed about 120 points. The pair closed just shy of the 1.57 line. The upcoming week is a busy one, highlighted by Claimant Count Change and Retail Sales. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. The US dollar boasted some

GBP/USD Forecast Dec. 8-12

GBP/USD Forecast Dec. 8-12

The British pound moved higher earlier in the week but couldn’t consolidate the gains and showed modest losses on the week. The pair closed at 1.5568. This week’s key event is Manufacturing Production. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. In the US, Non-Farm Payrolls report was outstanding with a 321K job

GBP/USD Forecast Dec. 1-5

GBP/USD Forecast Dec. 1-5

The British pound flexed some muscle but couldn’t consolidate the gains and showed little change on the week. The pair closed at 1.5632. This week’s key events are the PMI releases and the Autumn Forecast Statement. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. British GDP posted a respectable gain of

GBP/USD Forecast Nov. 24-28

GBP/USD Forecast Nov. 24-28

The British pound managed to hold its own against the dollar last week, showing slight losses. The pair closed at 1.5627. This week’s key events are the Inflation Report Hearings and Second Estimate GDP. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. British CPI remained steady at 1.3%, while Retail Sales posted an excellent gain