GBP/USD reversed directions last week and lost close to 1 percent. The upcoming week has five releases. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.
In the UK, March PMIs signaled strong economic growth. Services PMI improved to 56.3, up from 49.5. This was well into expansionary territory, above the 50-level. Construction PMI jumped to 61.7, up from 53.3. This showed the strongest rate of construction output growth since September 2014.
In the US, JOLTS Job Openings rose to 7.37 million, up from 6.92 million and well above the forecast of 6.91 million. However, unemployment claims climbed unexpectedly, from 719 thousand to 744 thousand, well above the estimate of 682 thousand.
The Federal minutes indicated that the central bank remains concerned about the strength of the US economy and will continue its QE program in order to support economic growth.
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GBP/USD daily chart with support and resistance lines on it. Click to enlarge:
BRC Retail Sales Monitor: Monday, 23:01. The British Retail Consortium’s Retail Sales Monitor rose 9.5% in February. The upturn is expected to continue in March, with an estimate of 11.9%.
GDP: Tuesday, 6:00. Monthly GDP is projected to show a gain of 0.5% for February, after a reading of -2.9% beforehand.
Manufacturing Production: Tuesday, 6:00. The indicator declined by 2.3% in January, its first decline in nine months. An upturn is projected for February, with a consensus of 0.5%.
BOE Credit Conditions Survey: Thursday, 8:30. The Bank of England’s quarterly report details lending conditions and investors will be interested in the bank’s view of the economy, as health restrictions continue to be lifted. The survey provides projections for the next three months.
CB Leading Index: Thursday, 13:30. The index, which is based on 7 economic indicators, declined by 0.4% in January. Will we see an improvement in the upcoming reading?
Technical lines from top to bottom:
We start with resistance at 1.4036.
1.3944 is next.
1.3824 has switched to resistance after the pound sustained sharp losses last week.
1.3699 is an immediate line of support.
1.3582 (mentioned last week) is the final support level for now.
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I am bullish on GBP/USD
The US dollar appears to have run out of steam, as US Treasury yields have retreated and the Fed remains in dovish mode. The UK government continues to lift health restrictions which is boosting economic growth.
Kenny Fisher - Senior Writer
A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.
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