GBP/USD fell 2.5% last week, its worst week since October 2017. The upcoming week features only one event, High Street Lending. Here is an outlook for the highlights of the upcoming week and an updated technical analysis for GBP/USD.
A host of weak British releases weighed heavily on the British pound last week. Manufacturing and services PMIs pointed to contraction, with readings below the 50-level, and both missed their forecasts. Wage growth continued to slow, coming in at 3.2%. This marked the lowest gain since April. Retail sales declined 0.6%, its third decline in four months. The Bank of England maintained rates at 0.75%, but cut its growth forecast from 0.2% to 0.1%. The week wrapped up on a positive note, as Final GDP was revised upwards to 0.4%, up from 0.3% in the initial release.
In the U.S., manufacturing PMI improved to 52.5 in December, just shy of the estimate of 52.6 pts. This was the indicator’s strongest gain since March. The week ended with Final GDP, which was unrevised at 2.1 percent. This is indicative of a U.S. economy that is performing well.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
- High Street Lending: Friday, 9:30. This indicator is an important gauge of the strength of the housing sector. In October, the major banks approved 41.2 thousand, down from 42.3 thousand a month earlier. The estimate for November stands at 41.5 thousand.
GBP/USD Technical analysis
Technical lines from top to bottom:
With the pound sustaining sharp losses last week, we start at lower levels:
We start with resistance at 1.3375. This is followed by the round number of 1.3300.
1.3170 has switched to a resistance role after strong losses by GBP/USD last week.
1.3070 was a high point in November 2018.
1.3000 (mentioned last week) remains relevant. The pair ended the week at this line.
1.2910 has held in support since early December. 1.2850 is next.
1.2728 has held in support since mid-October.
1.2616 is the final support level for now.
I am bearish on GBP/USD
Last week’s soft data points to weakness in the British economy. The post-election euphoria which sent the pound soaring has quickly evaporated, as talks between London and Brussels over a free trade agreement could be acrimonious.
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