Category: GBP USD Forecast

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 that previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. The statement was followed by a hawkish Yellen, with a strong hint that the Fed could raise rates as early as the second quarter of 2015. There was more good news from the employment front, as Unemployment Claims posted another strong release. In the UK, inflation continues to drop, as CPI dipped to 1.0%. Retail Sales looked sharp, rising 1.6%. The pound moved higher after the retail sales report but gave up most of these gains before the end of the week.

Updates:

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

GBPUSDForecast Dec.22-26

  1. FPC Meeting Minutes: Monday, 9:30. The FPC released a statement last week, at the same time that the BOE released its Financial Stability Report. If the minutes contain any references or hints about interest rate policy, we could see some movement from GBP/USD.
  2. Current Account: Tuesday, 9:30. This is the key indicator of the week. Current Account is closely linked to currency demand, so an unexpected reading can have a significant impact on the direction of GBP/USD.  The indicator posted an unexpectedly large deficit in Q2, rising to GBP 23.1 billion. This was much higher than the estimate of a deficit of 16.9 billion. Another large deficit is expected, with a forecast of -21.1 billion for Q3.
  3. BBA Mortgage Approvals: Tuesday, 9:30. The indicator has been on a downward trend, having softened for four straight readings and falling short of expectations on each occasion. In October, the indicator dipped to 37.1 thousand and little change is expected in the upcoming reading.
  4. Final GDP: Tuesday, 9:30. GDP will wrap up a quiet week. The indicator rose to 0.9% in Q2, edging above the estimate of 0.8%. This marked the strongest gain we’ve seen from GDP in seven quarters. Another strong gain is expected, with the estimate for Q3 standing at 0.7%.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5723 and climbed to 1.5785.  The pair then reversed directions, dropping sharply to a low of 1.5543, as support held at 1.5539 (discussed last week). GBP/USD closed at 1.5617.

Live chart of GBP/USD:




Technical lines from top to bottom

We begin with resistance at 1.6130. This line has remained intact since late October.

1.6002 is protecting the psychologically important 1.60 level. This is followed by 1.5911.

1.5746 was tested early in the week but remains a strong resistance line. It was an important support level in January 2013.

1.5625 continues to have a busy December and switched to a resistance role last week as the pound dropped  sharply.

1.5539 weakened but held on as the pair dropped close to this support level. It could face pressure early in the week if the pair loses ground.

1.5290 was a cushion in July 2013.

1.5114 is the final support line for now. It had remained intact since March 2013.

I am neutral on GBP/USD.

With a light Christmas week schedule in both the US and the UK, trading will be thin as the markets wrap up the year and get ready for 2015. However, GDP releases in both countries will be closely watched, and any unexpected readings could affect the movement of GBP/USD.

In our latest podcast, we run down all aspects of the Fed decision, discuss the running down of oil, the run down Russian ruble and the weak currency down under:

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Download it directly here.

Subscribe to our podcast on iTunes.

Further reading:

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

GBP/USD Forecast Nov. 17-21

GBP/USD Forecast Nov. 17-21

The British pound lost over 200 points last week, closing at 1.5658. This is the GBP/USD’s lowest level since September 2013. This week’s key events are Retail Sales and Preliminary GDP. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. US employment numbers disappointed last week, as jobless claims missed expectations

GBP/USD Forecast November 10-14

GBP/USD Forecast November 10-14

The British pound continues to slide, as GBP/USD lost about 100 points for a second straight week. The pair closed at 1.5861, its lowest weekly close since September 2013. This week’s major events are Claimant Count Change and the BoE Inflation Report. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. US Nonfarm Payrolls

GBP/USD Forecast November 3-7

GBP/USD Forecast November 3-7

The British pound softened last week, as GBP/USD lost about 100 points. The pair closed at 1.5984, the first time weekly close below 1.60 since September. The upcoming week is a busy one, led by PMIs and Manufacturing Production. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. In the

GBP/USD Forecast October 27-31

GBP/USD Forecast October 27-31

For a second straight week, the British pound showed movement but was unchanged over the week. The pair closed at 1.6084. There are 7 events on the schedule. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. British Retail Sales and manufacturing data disappointed, but GDP matched the forecast. In

GBP/USD Forecast Oct. 20-24

GBP/USD Forecast Oct. 20-24

The British pound showed some movement during the week but closed unchanged, at 1.6091. This week’s key events are Retail Sales and Preliminary GDP. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD. The US dollar held its own last week, despite weakness in US retail sales and a disappointing PPI reading.