GBP/USD posted considerable losses, erasing the gains seen the week before. The upcoming week has four releases, including GDP. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.
UK PMIs were a mixed bag in December. Manufacturing remains strong, as the PMI accelerated to 57.5, up from 55.6 beforehand. This was the highest level since November 2017. Services PMI has slipped into contraction territory and came in at 49.4, below the neutral 50-level. Construction also remains in expansionary territory and came in at 54.6 points.
- BRC Retail Sales Monitor: Tuesday, 00:01. This indicator looks at retail sales in BRC shops. In November, the indicator rose to 7.7%, its highest level in five months. The estimate for December stands at 5.9%.
- RICS House Price Balance: Thursday, 00:01. The index has shown strong improvement in recent months, pointing to a stronger housing market. The upcoming estimate is that 61% of reported surveyors will report an increase in house prices.
- GDP: Friday, 7:00. The monthly GDP report has been falling and came in at just 0.4% in October. Analysts are braced for a sharp contraction of 4.6% in November.
- Manufacturing Production: Friday, 7:00. The manufacturing sector remains strong and Manufacturing Production climbed to 1.7% in October, up from 0.2% beforehand. Another strong reading is projected for November, with a forecast of 1.0%.
GBP/USD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 1.4029.
1.3860 is next.
1.3769 has held in resistance since May 2018.
1.3624 has switched to a support role after GBP/USD lost ground last week.
1.3502 (mentioned last week) is providing support.
1.3336 is next.
1.3243 is the final support level for now.
I am neutral on GBP/USD
The US dollar is showing signs of stabilizing, but it’s unclear if the currency will rebound after months of decline. The UK economy is in for a tough time, as the UK is enduring its third Covid lockdown.
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