After five consecutive losing sessions, GBP/USD managed to reverse directions and posted gains last week. British data was strong, as Final GDP for Q3 was unrevised at 0.6% and retail sales posted a strong gain of 1.4%. As expected, the BoE held rates at 0.75%.
Brexit took a back seat on Thursday, as the U.K posted solid data and the Bank of England stayed on sidelines. Prime Minister May is in a political pickle, as the withdrawal agreement with the EU will have a tough time getting through parliament. A vote is scheduled for mid-January, and if the deal is voted down, Britain could be on its way to a no-deal exit, which would likely send the pound sharply lower. Traders can expect a quiet Christmas week, but the pound could resume its downward spiral after New Year’s.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
* All times are GMT
GBP/USD Technical analysis
Compared to roller-coaster a week earlier, Pound/dollar had a quiet week. 1.2590 (mentioned last week),) saw some activity late in the week.
Technical lines from top to bottom:
1.3170 was a swing high in early November.
1.3070 was a high point in mid-November. The symbolic number of 1.3000 is important after providing support to the pair in late September. 1.2910 was a high point in late November. 1.2850 capped recovery attempts in late November.
Further down, 1.2790 served as support late August and also beforehand. 1.2765 was a swing low in mid-November. It is followed by the trough of 1.2725 seen earlier that month.
The current 2018 trough at 1.2660 is the next level. 1.2590 is next.
Even lower, 1.25 is a round number and also worked as support in early 2017. It could break this week.
Further down, 1.2420 and 1.2330 are notable.
I am neutral on GBP/USD
With investors winding up positions at the end of the year and markets taking off some time on both sides of the pond, we’re unlikely much movement this week from GBP/USD.
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