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After a wild week that ended with negative GDP, the Pound shrank with the economy. This week’s Nationwide HPI, CBI Realized Sales and 4 other events will move the Pound. Here’s a review of the upcoming week for the British Pound, and an updated technical analysis for GBP/USD.

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

GBP/USD Forecast

The week began well for the Pound, with hawkish statements from the BoE and high expectations for the end of the recession. The disappointment from the GDP was strongly felt. After being beaten, will the Pound find new fuel? Let’s review the events this week:

  1. Nationwide HPI: This important house price index isn’t the earliest, but it’s quite precise. House prices have been rising in Britain in the past 5 months, showing that this sector is recovering. After a 0.9% rise last month, it’s expected to rise by 0.7% this time. The exact time of publication isn’t known yet. Check out the daily outlooks for the exact timing.
  2. BOE Financial Stability Report: The British economy is stable, but not in a good way. Following last week’s depressing GDP figure, the Bank of England is expected to release this report about the stability of the financial system this week. The exact timing is unknown. A good report will help the Pound.
  3. Adam Posen speaks: Adam Posen is a member of the MPC, responsible for rate decisions. He’s rather dovish, urging the expansion of the QE program, thus weakening the Pound. It will be interesting to watch his words quite early in the week – Monday at 6:35 GMT.
  4. CBI Realized Sales: The Confederation of British Industry surveys both retailers and wholesalers when composing this important sales indicators. For the first time in 6 months, this figure was positive last time at 3 points, indicating a higher sales volume. The positive trend is expected to continue, with 6 points this time. Published on Tuesday 11:00 GMT.
  5. Net Lending to Individuals: When consumers are more optimistic and confident, they borrow more and spend more. After dipping August’s release, consumers have increased lending last month, at a net rate of 0.7 billion. This number is expected to repeat itself this time. Published on Thursday at 9:30 GMT.
  6. GfK Consumer Confidence: This survey of 2000 consumers  has shown pessimism in the past three years or so. The trend is positive though, with -16 last time, the highest in 20 months. It’s expected to edge higher this time, and rise to -14. Published on Friday, just after midnight.

GBP/USD Technical Analysis

The Pound continued the comeback at the beginning of the week, stopping to rest at 1.65. It then continued higher, even passing the mighty 1.6660 resistance line just before the GDP release on Friday morning. A sharp fall sent it down to close at 1.6301. Quite a drama.

Support and resistance lines haven’t changed since last week’s GBP/USD outlook. 1.6660 still serves as a strong resistance line, serving as such during the summer and at the height of the crisis last year. Above that, 1.7042 is the peak that GBP/USD reached when it managed to pass 1.6660. It probably won’t be approached soon.

Looking down, 1.6110 served as a resistance line during the latest comeback of the Pound. Below that, 1.5720 is a very strong resistance line.

My sentiment remains bearish. The amazing comeback that the Pound made was shattered by the ongoing recession. For me, it wasn’t a big surprise, given the NIESR GDP estimate.

Check out Mohammed Isah’s technical analysis for GBP/USD.

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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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