Pound at New Ground – What’s Next?
Posted on May 23, 2009 by Yohay
Filed Under Forex Opinions | 8 Comments
GBP/USD broke a few resistance lines on the way up. It seems like the sky is the limit, but will it take a break? Nationwide HPI and CB Realized Sales are some of the key events for the Pound. Let’s see how this week unfold, and what technical levels await cable.
GBP/USD had a rollercoaster week, receiving good and bad, expected and unexpected news. All in all, data was ok in Britain, but the downgrading by S&P and the fall of the US dollar were no less significant.
At the end of week, cable broke the 1.5370 line, the 1.5720 line, and flirted with the round figure of 1.60. GBP/USD closed at 1.5924.
Read more about the Pound’s rollercoaster week.
Technical view for GBP/USD
So, the Pound is now at new ground. It hasn’t been in these levels since mid-November. During this time, the Pound was pounded by various economic catastrophes, and reached a low of 1.35.
But since mid-March, GBP/USD made a huge comeback and it now looks upwards. The next resistance point is at 1.6671, which was the highest point on October 30th. 1.68 was a low point on October 10th. So, there’s strong resistance.
On the other hand, the Pound could stop to breath. Looking back, 1.5370 served as a very strong resistance line, and it now serves as a strong support line. 1.5720 still remains a minor support line for the British Pound.
What will affect the Pound this week?
- Nationwide HPI: Published on Tuesday – expected to show a fall of 0.9% after falling by 0.4% last time. This is a major indicator of the housing sector, one of the most sensitive sectors of the British economy.
- BBA Mortgage Approvals: Another indicator for the troubled real estate market – expected to rise to 29.1K, published on Wednesday.
- CBI Realized Sales: The Confederation of British Industry publishes this important figure on Thursday. It’s expected to turn from a positive figure of 3 to -10. Falling below 0 means that the sales volume in the UK has fallen. A negative figure, even if within expectations, will hurt the Pound.
- GfK Consumer Confidence: Published between Thursday to Friday, is expected to stay negative, at -25. This means that consumers are still pessimistic in the UK. After a disappointing budget, credit downgrade and a suffering real estate sector, this is very logical.
This week’s movement probably won’t match last week’s. But these key events, together with unexpected news (?) will shake the Pound.
Do you think it’ll continue it’s journey towards 1.67, or will it take a break?
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eurusd broke 1.40 level and holding. i’m expecting the pair will reach at least 1.4170 – 1.42 before some correction, this week. so, pound will rise too, but probably bounce from 1.60 back. after a retracement, i think it will break 1.60. the dollar has to be weaken more. nowadays, good or bad news harm dollar. if US data come good, we will sell usd, for risk appetite. if US data come bad, we sell usd again, cos we lost our confidence to usd & us actually. only bad european data can broke this cycle in short term i think. and may be some verbal intervention from ecb or some… regards.
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