GBP/USD Outlook – February 15-19

The upcoming week is very busy for cable traders. Inflation, employment and retail sales are among the many events. Here’s an outlook for this week’s data and an updated technical analysis for GBP/USD.

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

One of the things that hurt the Pound this week was the NIESR GDP estimate aligned with the official GDP release for Q4 and pointed to very weak growth. The Pound survived it. Let’s see the events that await us:

  1. Rightmove HPI: Published on Monday at midnight GMT. The first event of the week is an early indicator of house prices. According to Rightmove, house prices have risen by 0.4% last month after two months of drops. A similar rise is predicted this time.
  2. CPI: Published on Tuesday at 9:30 GMT. British inflation is on the rise. BOE governor Mervyn King refuses to admit this and insists that the rise is temporary – meaning no rate hike is in the horizon. Last month’s 2.9% rise was still OK – in the government’s target. This time, an annualized rise of 3.6% is predicted. What will King say about this? Also Core CPI is predicted to rise – from 2.8% to 3.2% and RPI (Retail Price Index) is predicted to rise by 3.8%. Note that the RPI has been negative for many months.
  3. BOE Inflation Letter: Publication tentative. If CPI expectations are met, and inflation rises beyond 3%, Mervyn King is obliged to issue a public letter to the government, explaining the reasons for this and the measures that will be taken to address it. It will be interesting to hear his official response to such numbers.
  4. Employment data: Published on Wednesday at 9:30 GMT. The number of unemployed Brits is expected to fall for a third month in a row. The Claimant Count Change is predicted to drop by 14.6K, following a 15.2K drop last month. This early indicator (for January) moves the Pound. British unemployment rate is predicted to remain stable at 7.8% in December 2009. Economists were wrong on this in previous months. This highly cited figure exceeded expectations.
  5. MPC Meeting Minutes: Published on Wednesday at 9:30 GMT, together with the employment data. The last rate decision ended without a rate hike and without renewing the funds for the QE program. King already said that this program might be expanded again, thus hurting the Pound. We’ll get to see what the different members thought about it. In the past, their votes split 3 ways at times. Together with the employment figures, this is a very shaky time for GBP/USD.
  6. Public Sector Net Borrowing: Published on Thursday at 9:30 GMT. British public expenditure is eyed by the opposition and by investors alike. After many months of extended borrowing, the British government is expected to report negative borrowing – something that will help the Pound.
  7. CBI Industrial Order Expectations: Published on Thursday at 11:30 GMT. This indicator has been negative for a long time, meaning that a lower volume of orders is expected. Also this time, the 550 manufacturers that are surveyed are predicted to show lower expectations. The result of the survey is expected to be -35, slightly better than -39 last month.
  8. Paul Fisher talks: Will begin speaking on Thursday at 19:00 GMT. BOE Executive Director Paul Fisher is an influential voting member and he might move the Pound if he makes interesting statements in his speech in London. He might relate to the weak GDP.
  9. Retail Sales: Published on Friday at 11:30 GMT. The eventful week finishes with a strong number as well. This important consumer gauge is predicted to drop by 0.5% after rising by a disappointing 0.3% last month. This will fuel Friday’s volatility.

GBP/USD Technical Analysis

The Pound got used to a new range this week: 1.5530 to 1.5770. At the end, GBP/USD closed very close to last week’s close.

I’ve pushed up the 1.5720 line that appeared in last week’s forecast to 1.5770, according to the current trading range. Above, 1.5833 was December’s low and supplies a minor line of resistance.

Higher, 1.6110 is another resistance line, backed by 1.6260, a line that served as both a support and resistance line recently.

Looking down, 1.5530 is the initial line of support, serving as such this week. Below, 1.5350 is a strong line of support, serving in the past as a resistance line before the Pound went up.

Even lower, the magical round number of 1.50 awaits, but it’s far below.

I’m bearish on the Pound

Weak economic growth is a burden on the British economy, despite rising employment and inflation. In addition, GBP/USD didn’t recover from losing an important support line.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Forex Daily Outlook – November 19th 2009

Currencies continue to trade in narrow ranges. Today, British retail sales and American unemployment claims stand out. Let’s see what’s up for today.
In Australia, Guy Debelle, the RBA Assistant Governor, will be making a public appearance, and might give some more hints about the upcoming rate decision in December. Also note the RBA Monthly Bulletin.
For [...]

British Pound Outlook – November 16-20

Looking for the latest outlook, for the current week? Check out the section: GBP/USD Forecast
After a roller coaster week, lots of figures await traders of the British Pound: retail sales, consumer price index and the MPC meeting minutes stand out. Here’s an outlook for a busy week of events for the Pound, and an updated [...]

Forex Daily Outlook – June 12th 2009

It’s a relatively quiet Friday this time. How will the greenback close the week? Here are the event that will influence it…
Japanese Household Confidence is the first significant event for today. It’s expected to rise to 34.1 points.
In Europe, German WPI is predicted to rise by 0.1%, almost nothing. French CPI isn’t expected to be much stronger [...]

Forex Daily Outlook – April 21st 2009

Tuesday features lots of figures from around the world. Canadian interest rate, German ZEW Economic Sentiment and British CPI will be in the limelight. Let’s see what’s up for today.
Australia starts the day with the Monetary Policy Meeting Minutes. In its last decision, the RBA cut the rate by 0.25%, a compromise between mixed expectations. To clarify [...]

  • Forex Crunch

    Forex Crunch is a blog all about the foreign exchange market. It includes and will include: tutorials, basics of the forex market, daily and weekly forex analysis, technical analysis, forex software posts, and whatever is related to Forex. Forex Crunch aims to deal with forex trading, but with a more personal touch. More...

  • Stay up to date!

    Subscribe By Email

    Enter your email address:


    Trade together with Currensee

    Search

  • Forex Crunch Pages

  • Forex Categories

Bad Behavior has blocked 2623 access attempts in the last 7 days.