Browsing: GBP USD Forecast

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.

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GBP/USD Forecast and technical analysis ► preview of the main events that move the British Pound (Sterling), and especially pound/dollar (cable) during the week. Here are some general data. Scroll down for the latest GBP/USD outlook

Pound/dollar characteristics

GBP/USD is a major pair and certainly one of the first to emerge in modern trade. Its nickname “cable” originates from transmitting the exchange rate over the telegraph cable between the UK and the USA in the 19th century.

Above average volatility characterizes pound/greenback trading. In comparison to other major pairs, stop-loss orders are usually placed at wider margins.

Another tidbit of Sterling trading is that the pair “front-runs” economic publications from Great Britain. We usually see a significant market movement ahead of a release. Leaks, rumors, or sheer nervousness move GBP USD

The pound is a moderate “risk” currency. When the global mood is positive, GBP often gains against the dollar, albeit usually not at the same magnitude as commodity currencies. When markets become risk-averse, Sterling is on the retreat.

Brexit talks and GBP/USD

The biggest market mover of GBP/USD is the surprising decision of voters in the United Kingdom to leave the European Union. This unprecedented move shook up  Her Majesty’s currency. Brexit has sent Pound/USD to levels last seen in 1985 and despite the recovery, Sterling still suffers.

The economy did well in 2016, before and after the EU Referendum, but it slowed down in 2017. On the other hand, the weak pound pushed inflation above the rises in wages. The Bank of England decided to raise rates in November 2017 but clarified it is a one-off. Mark Carney and his colleagues foresee only two hikes in the next three years.

Brexit negotiations were deadlocked for quite some time, but fresh hopes help the pound stabilize. PM Theresa May may agree to pay the high “divorce bill” that the EU demands.

Latest weekly GBP/USD forecast:

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