Browsing: GBP USD Forecast

The British Pound hardly moved during the last week. This week’s economic indicators will move the Pound, but probably won’t move it out of its range. Here’s an outlook for this week’s key events and a technical analysis for GBP/USD.

Last week provided two surprises in British news: on one hand, Retail Sales surged by 1.2%, 3 times better than 0.4% that was expected. On the other hand, the all-important GDP release was a big disappointment. Despite these major surprises, GBP/USD didn’t budge from the narrow range we got used to.

Here are this week’s important releases:

  1. CBI Realized Sales: The first British figure for this week is published on Tuesday at 10:00 GMT. This leading indicator of British consumer spending is expected to stay negative, which means a lower sales volume. After scoring -17 for two months in a row, it’s expected to rise to -12.
  2. Net Lending to Individuals:  The debt level in the UK is predicted to rise from 0.6 billion to 0.9 billion, indicating that lenders feel better with giving away their money, and that consumers are ready to borrow. Last month, this figured fell short of expectations. The fresh figure will be released on Wednesday at 8:30 GMT.
  3. Nationwide HPI: As always, the British real estate sector still is one of the key factors in the economy. After house prices tumbled down, they are expected to rise modestly, this time by 0.3%. The figure will be published on Thursday at 6:00 GMT. Despite not being the earliest report, this wide survey is more reliable.
  4. GfK Consumer Confidence: British consumers are still quite pessimistic, and are expected to stay so. The figure has improved slowly in the past months, and has moved to up -25 from the bottom of -39. This time it’s predicted to take another small step forward, to -23. This figure is published on Thursday at 23:00 GMT (midnight in Britain). For the GBP/USD pair, it’ll serve as a prelude to the American GDP, published during Friday.

These are the main events for the Pound, in a rather “slow” week in economic indicators. GBP/USD will naturally move by American figures as well, with the aforementioned GDP and Durable Goods Orders being the most interesting releases in America.

GBP/USD Technical Analysis

Range trading continued to dominate the popular GBP/USD pair. During last week, cable traded between 1.6310 to 1.6584, sticking to the narrow range that we already got used to in the last two months.

This week, it didn’t test the far ends of this range, 1.60-1.6660. The level of 1.62 continues to be a minor resistance line. Since the technical analysis didn’t change dramatically, I’ll point you to the last week’s British Pound outlook.

Like the Euro and other currencies, the big question is: when will this all explode?

When will the dollar get a new direction? Will the greenback go up or down? The “explosion” probably won’t happen this week though…

Further reading:

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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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