Latest
Forex Crunch
You are at:»»»GBP/USD Forecast Jan. 11-15 2021 – Pound slips on mixed PMIs

GBP/USD Forecast Jan. 11-15 2021 – Pound slips on mixed PMIs

0
By Published: Last Modified: GBP USD Forecast, Majors, Weekly Forex Forecasts

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.

In the US, ISM PMIs reports pointed to accelerated expansion in December. Manufacturing PMI improved to 60.7, up from 57.5 beforehand. This beat expectations and was the highest reading since August 2018. Services PMI climbed to 57.2, up from 55.9 beforehand. This exceeded the estimate of 54.5 points.
Nonfarm payrolls was a disaster, as the economy shed 140 thousand jobs. The consensus estimate called for a gain of 60 thousand. There was better news from wage growth, which jumped 0.8%, up from 0.3% a month earlier. This was the strongest gain since April.

.

GBP/USD daily graph with resistance and support lines on it. Click to enlarge:

  1. 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%.
  2. 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.
  3. 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.
  4. 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.

Further reading:

Safe trading!

Get the 5 most predictable currency pairs

About Author

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.