GBP/USD was almost unchanged last week. The upcoming week has four releases, including the BoE rate decision. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.
Strong UK employment numbers gave sterling a slight boost early last week. Wage growth jumped to 3.6%, up sharply from 2.7%. Unemployment rolls rose by just 7 thousand, well below the estimate of 47.5 thousand. The unemployment rate nudged up from 4,.9% to 5.0%, its highest level since March 2016.
In the US, CB Consumer Confidence rose to 89.3, up from 87.1 beforehand. Durable Goods Orders continued to slip, falling to 0.2% in December. This was well short of the forecast of 1.0%. The Federal Reserve policy meeting reiterated a dovish stance and Fed Chair Powell poured cold water on speculation that the Fed would taper its QE program in the near future. Advance GDP for Q1 posted a respectable gain of 4.0%, close to the estimate of 4.2%. .
- Manufacturing PMI: Monday, 9:30. Manufacturing remains in expansionary territory, but the PMI slowed to 52.9 in January, its lowest level since June. The final reading is expected to confirm the initial estimate.
- Services PMI: Wednesday, 9:30. The Services PMI slowed sharply to 38.8, down from 49.4 previously. This points to sharp contraction. The final release is expected to confirm the initial estimate.
- Construction PMI: Thursday, 9:30. The Construction PMI is expected to dip to 53.0, down from 54.6 beforehand. This would be its lowest level since May.
- BoE Rate Decision: Thursday, 12:00. The Bank of England is expected to stand pat and maintain interest rates at 0.10%. Investors will be interested in the MPC quarterly report, which will provide a close look at the health of the UK economy.
Top to bottom:
We start with resistance at 1.4005.
1.3875 is next.
1.3779 has held in resistance since May 2018.
1.3666 (mentioned last week) is an immediate support line.
1.3553 is next.
1.3423 has held in support since late December.
1.3327 is the final support level for now.
I am neutral GBP/USD
The US dollar has shown some improvement in the month of January, after the pound registered sharp gains late in 2020. The UK economy is being hampered by Covid lockdowns, while in the US a dovish Fed and more stimulus could be bearish for the US dollar.
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