After testing the mighty resistance line of 1.6660, the Pound bounced back last week. This week, four key events could send it over the top: CPI, Claimant Count Change, a speech by Mervyn King and Retail Sales will move the British Pound. A review on this week’s key events this week, and a technical outlook.
- CPI: Is Britain sinking into deflation? The Euro zone is already there, and Britain has avoided falling prices so far. The Consumer Price Index is expected to rise by 1.9% (annually adjusted). This is lower than last month’s 2.3%. If this happens, the Pound will suffer. This is the fisr indicator for the week, and quite a strong one indeed. Published on Tuesday, at 8:30 GMT.
- Claimant Count Change: The earliest and most important indicator for the British job market. Claims are predicted to rise to 61.8K. The British job marjet still hasn’t reached a bottom. The unemployment rate is on the rise. It’ll be released on Wednesday at 8:30 GMT.
- Mervyn King talks: The Governor of the Bank of England will talk at the Mansion House and will shed more light on the economy. In the last rate decision, there were no big news regarding the Quantitative Easing program. We will hear more about that decision in the MPC Meeting Minutes release. Mervyn King’s speech adds to that release and will surely shake the Pound. All this happens on Wednesday.
- Retail Sales: This major economic indicator has shown strength last time by rising nicely – 0.9%. This time, expectations are more modest – a rise of 0.4%. British Retail Sales are released on Thursday at 8:30 GMT.
GBP/USD Technical Outlook
Cable had a bad start last week, falling below 1.60 and quite close to 1.58. It then got up on its feet, and went rose as high as 1.6621 before closing at 1.6439.
Yup, the major resistance line of 1.6660 that I’ve mentioned here over and over again, was tested again and was up for it. As this line shrugs off more tests, it becomes stronger. If GBP/USD breaks it, it’ll fly up.
Looking down, 1.58 turns into a strong resistance line. At the current price, only a major disaster could send the Pound below this point.
For further reading:
- A coverage on the Canadian dollar.
- A broad view of this week’s events: Forex Weekly Outlook.
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