GBP/USD started the week with gains, but ended the week with modest losses. The pair closed the week at 1.5563. The upcoming week has just five events on the schedule. Here is an outlook of the events and an updated technical analysis for GBP/USD.
The UK posted solid manufacturing and GDP data last week, but the pound failed to take advantage against the broadly stronger US dollar. In the US, weak employment and housing data didn’t dampen enthusiasm for the dollar, as the FOMC minutes confirmed that QE tapering is only a matter of time.
[do action=”autoupdate” tag=”GBPUSDUpdate”/]GBP/USD graph with support and resistance lines on it. Click to enlarge: 
- CBI Realized Sales: Wednesday, 10:00. This index is based on a survey of retailers and wholesalers, and is an important indicator of consumer spending. The index jumped from +1 to +17 points last month and the markets are expecting more good news in the upcoming release, with an estimate of +20 points.
- BOE Governor Mark Carney Speaks: Wednesday, 11:45. Carney will speak at a conference in Nottingham. Analysts will be monitoring his remarks, looking for some clues as to the BOE’s future monetary policy. A speech which is more hawkish than expected is bullish for the pound.
- Gfk Consumer Confidence: Thursday, 23:01. Consumer Confidence has been improving in recent releases, but remains deep in negative territory. The previous release came in at -16 points and the estimate for the August release calls for a slight improvement, at -13 points. Consumer confidence will have to improve substantially if the UK economy is to get back on its feet.
- Nationwide HPI: Friday, 6:00. Last month, this housing inflation indicator had its best showing since last August, posting a strong gain of 0.8%. The markets are anticipating a respectable gain of 0.6% in the upcoming release.
- Net Lending To Individuals: Friday, 8:30. This indicator is closely correlated to consumer confidence and spending, as an increase in lending points to consumers who wish to spend more and are comfortable borrowing money. The indicator increased nicely to 1.5 billion pounds last month, up from 1.0 billion. The markets are expecting the upward trend to continue, with an estimate of 1.7 billion pounds for the August release.
Live chart of GBP/USD: [do action=”tradingviews” pair=”GBPUSD” interval=”60″/]
GBP/USD Technical Analysis
GBP/USD opened the week at 1.5624. The pair climbed to high of 1.5717 but then reversed direction, dropping to a low of 1.5539. GBP/USD closed the week at 1.5563, as support at 1.5550 (discussed last week) held firm.
Technical lines from top to bottom:
We start with resistance at 1.6154 , which was last tested in January. This line marked the high point as the GBP/USD went on a sharp slide which saw the pound drop below 1.49.
1.5962 saw a lot of activity in February and March 2012 and has stayed in place since mid-January.
1.5832 was busy in late January and has remained in place as a resistance line since February. 1.5752 was last breached in June, marking the peak of a rally by the pound which started in May.
1.5648 saw a lot of activity in June and continues to provide resistance. This line was breached as the pair moved higher early in the week, but remained intact at the end of the week.
1.5550 saw action in mid-June, as GBP/USD pushed past this line and climbed as high as the mid-1.5750 range. It was briefly breached as the pair dropped sharply, but remained intact at the end of the week. This line could be tested early next week.
1.5484 was breached in June, as the pound went on a sharp skid that saw it drop below the 1.49 line.
1.5350 continues to provide support. This line saw some action in the first week in August, when the pound started a rally that saw it climb above the 1.57 line.
1.5258 is the next line of support. 1.5196 saw action in mid-July and again in the first week of August.
1.5110 was busy in July but has had a quiet August as the pair continues to trade at higher levels.
1.5000 is the final support level for now. It is a critical support line, and has remained in place since early July.
I am bearish on GBP/USD.
The pound lost ground this week despite some strong UK data and disappointing numbers out of the US. With the markets fixated on QE tapering, the US dollar has looked sharp against the major currencies, as QE tapering is a dollar-positive event. Market sentiment remains positive on the US economy, so the dollar could post further gains against the pound this week.
Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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