The British Pound has formed a new support line last week, and has narrowed its range. Will it make the break this week? 5 key events will shape the direction of GBP/USD this week: Rightmove HPI, BBA Mortgage Approvals, CBI Realized Sales, Inflation Report Hearings and Nationwide HPI. Here’s an outlook for this week’s key events in the Pound, and a technical outlook.
- Rightmove HPI: Published very early, on Sunday at 23:01 GMT, or one minute after midnight in Britain. Though this isn’t usually a very strong indicator, the very early publication makes it significant. This House Price Index is a fresh indicator, but not the most accurate one. It rose by 2.4% last time.
- BBA Mortgage Approvals: Another housing indicator, this time touching the more sensitive area of housing – bank mortgages. The banking sector was also one of the most problematic sectors in this crisis. Last month, Mortgage Approvals disappointed and rose only to 27.7K, and failed to reach the 29K mark. This time, expectations are for a rise to 29.5K. It’s published on Tuesday at 8:30 GMT.
- CBI Realized Sales: The Confederation of British Industry publishes this figure on a monthly basis, and focuses on the change in sales volume. Last time, this important figure was very bad – at -17 points. This time, expectations are low. It’s expected to remain there. In past releases the Pound shook after this publication. This time, it’s on Wednesday at 10:00 GMT.
- Inflation Report Hearings: The session at the Treasury Committee in the British parliament begins on Wednesday at 13:30 GMT, and no one knows when they’ll end. Apart from talking about inflation, Mervyn King and his fellows from the BoE will probably also relate directly to the forex market. They amy well express their preferred direction for the Pound. Naturally, this move cable…Mervyn King will also make a separate testimony about the banking crisis. He’ll be accompanied by Executive Director for Financial Markets Andrew Haldane and Chief Cashier Andrew Bailey.
- Nationwide HPI: The last major figure for the Pound is similar to the first one – house price index. This release is the second earliest HPI, but is more accurate than the Rightmore HPI. It’s published during Thursday, and is expected to turn negative, -0.4%, after rising by 1.2% last time.
The British Pound will naturally move with all the market on the publication of the FOMC Statement on Wednesday at 18:15 GMT. The stakes are high for a hint about future interest rate policy.
GBP/USD Technical Outlook
All in all, the British Pound rose only 40 pips against the dollar last week, from 1.6450 to 1.6490. But the way was interesting…
The Pound marked the 1.62 line as a strong support line. Cable didn’t fall below this line in three separate drops. So, a new and signifcant support line was formed.
Looking up, the major resistance line of 1.6660 wasn’t tested last week. This makes the line stronger. The highest point was 1.6560.
1.6200-1.6660 is the “acceptable” range for the Pound this week. Extremely strong or extremely weak indicators could take the Pound beyond these lines, and so can a strong statement by the FOMC.
The cable seems to be heading up, but it needs a little kick to make the move.
For further reading:
- A broad overview of events: Forex Weekly Outlook.
- A closer look at the loonie: Canadian Dollar Outlook.
- Geo-political trouble: Iran election crisis supports the dollar.
Have a great forex trading week!
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