GBP/USD had a relatively narrow range of trading and eventually ended the week higher. The new budget is the main event in a week that will certainly see Brexit talk moving markets once again. Here are the key events and an updated technical analysis for GBP/USD.
UK services PMI beat expectations and the bucked the trend of falling forward-looking indices. On the other hand, manufacturing output fell short of projections. On the Brexit front, the EU’s response to May’s speech was quite cold and the issue of the Irish border remains prevalent. In the US, the tariff talk had little impact on GBP/USD but the news of a breakthrough in the Korean peninsula helped cable stabilize. The US gained no less than 313K jobs but wage growth slipped to 2.6% casting doubts on the next Fed moves.Updates:
- Mar 18, 18:58: GBP/USD: Are GBP Traders Underpricing Downside Risks? – CIBC: The pound has a very busy week with top-tier indicators such as inflation and jobs. Moreover, the BOE decision and...
- Mar 12, 19:21: Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY – UOB: US wages are slow and inflation may be coming or not. What’s next for currencies? Here are the technical levels...
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
- Annual Budget Release: Tuesday, 11:30. The Chancellor of the Exchequer Phillip Hammond will present the new UK budget. This event, also known as the Spring Statement, will consist of new forecasts for the economy. In the event, growth forecasts were below 2% annually for all of the years in the forecast’s horizon. This will likely be no different due to uncertainty regarding Brexit. Any upgrade or downgrade may move the pound.
- CB Leading Index: Friday, 13:30. This composite indicator, comprised of 7 indicators, has dropped by 0.2% in December. We will now get the first read for 2018.
GBP/USD Technical Analysis
Pound/dollar traded in a narrow range, holding above 1.3765 (mentioned last week).
Technical lines from top to bottom:
1.4345 is the January 2018 swing high that is worth watching. 1.4280 was a top line in early February and it comes next.
1.4150 capped the pair in mid-February. 1.4070 is next, after serving as a swing high in late February.
It is followed by the round level of 1.40, which is eyed by many. 1.3935 was a pivotal line in the range.
1.3765 was the low point in early February. 1.3710 was a low point in early March.
1.3620 capped the pair on its way up and then turned into support. 1.3550 was the November peak.
I am neutral on GBP/USD
The trend remains to the downside, but the pair may consolidate for another week as there are few events. A miss on US inflation could also help it stabilize.
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