GBP/USD closed the week at 1.6330, a “good place in the middle”. It can go in any direction. The Pound faces a week full of events, with the GDP being the last and most important of them all. Here’s an outlook of the week’s major British indicators, as well as a technical analysis of GBP/USD.
- Rightmove HPI: This monthly house price index is the first indicator of its kind. It’s also first in the calendar of events – Published on Sunday at 23:00 GMT (midnight in the UK). The real estate market in the UK is recovering very very slowly. This early indicator, just as traders start a new week, could set the initial direction for the Pound.
- MPC Meeting Minutes: The discussion between the members of MPC will be published on Wednesday at 8:30 GMT. While no rate change was made, it’s still interesting to see what these economists are thinking about the British economy and the prospects for recovery.
- CBI Industrial Order Expectations: The Confederation of British Industry publishes this monthly indicator on Wednesday at 10:00 GMT. This indicator has brought bad news since the beginning of the year. It has always missed the target, and also remained negative (showing contraction) for over a year. Current hopes aren’t so good for the British manufacturing sector – the index is expected to improve only slightly – from -51 to -46. Only a very good surprise will shake the Pound after the release.
- Retail Sales: British Retail Sales swing in both directions and surprise traders each time. Consumer confidence in Britain is very fragile. After falling last time by 0.6%, Retail Sales are predicted to rise by 0.4%. This figure is published on Thursday at 8:30 GMT.
- BBA Mortgage Approvals: After many bad months, mortgage approval gave hope in the last release. The British economy suffered badly from the real estate sector, as aforementioned. Last month, this figure surprised by passing the 30K mark and hitting 31.2K. These levels had been the highest for over a year. Now, expectations are high – the bulls want to see an even higher figure – 33.3K. If expectations are met here and at the Rightmove HPI, this could push the Pound higher.
- Prelim GDP: The best is kept for last – Britain published the initial GDP estimations quite early. After a devastating first quarter, stabilization is expected. The final GDP for the first quarter showed a contraction of 2.4%. Now, economists are predicting a fall of 0.3%. Still not growing, but much better. Whatever the result is, the Pound will shake on Friday at 8:30 GMT.
GBP/USD Technical Analysis
The Pound, as well as most currencies, has been trading in quite a narrow range for quite some time – 1.60-1.6660.
There was one false break upwards, as the Pound reached 1.6744. This didn’t last long, and the 1.6660 resistance was restored. It was the high point on October 30th, as the Pound was tumbling down.
Downwards, the picture is more complex: 1.62 serves as a minor support line, serving as such recently. Further below, 1.60 is a more significant resistance line. The biggest barrier is 1.5750, which served as resistance line recently, and also near the end of 2008.
These lines in GBP/USD can be seen in the graph:
- A broad overview of the week’s events: Forex Weekly Outlook.
- A coverage of the loonie: Canadian Dollar Outlook.