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The British Pound continued falling this week, especially hurt by the final release of GDP. The upcoming holiday week contains very few indicators. Here’s an outlook for the events that will affect the Pound, and an updated technical analysis.

GBP/USD chart with support and resistance lines marked on it. Click to enlarge:

British Pound Outlook

The Quantitative Easing program that was eyed by many cable traders is probably finished, and won’t be renewed. The meeting minutes revealed that there was a consensus on leaving the program unchanged this time. The heavy government deficit is now eyed. Let’s start:

  1. Nationwide HPI: Published on Thursday at 7:00 GMT. British house prices have risen in the past 7 months, but the pace has slowed below 1% in the past three months. After a 0.5% rise last time, it’s expected to rise by 0.4% this time. This will shake the Pound.
  2. BOE Credit Conditions Survey: Released on Thursday at 9:30 GMT. This survey is released quarterly by the Bank of England and shows the sentiment in credit. A report indicating better conditions will help the Pound.

GBP/USD Technical Analysis

GBP/USD fell below the 1.6110 to which it dipped last week, and went further down, below 1.60, closing the week at 1.5959.

1.60 is now a minor resistance line, being also a psychological line. Further above 1.6110 is another resistance line, also it’s less significant than earlier. The lines haven’t changed since last week’s outlook.

The next line is somewhat stronger: 1.6260. Even higher, 1.65 is the next significant line, but it’s very far now.

Looking down, 1.5720 is a very strong support line. GBP/USD bounced off this line before it began the big comeback. Even lower, 1.5350 is the next support line, but there’s a very slim chance that the Pound will dip below 1.5720 this week.

I remain bearish on GBP/USD.

Britain’s economy is still behind other economies, and with the current dollar strength, the direction continues to be down.

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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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