GBP/USD Forecast March 8-12 – Pound downturn continues, UK GDP next

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GBP/USD sustained a second straight losing week, as the pair fell below the 1.39 line. The upcoming week has four releases, including monthly GDP. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.

UK manufacturing remains a bright spot in the economy, as Manufacturing PMI rose to 55.1, up from 54.1. Construction PMI showed growth, with a reading of 53.3, up from 49.2. The services sector showed improvement but remained in contraction, with a reading of 49.5. The 50-level separates contraction from expansion. Shop prices fell by 2.4%, the sharpest drop in 9 months, as shop owners tried to entice Covid-weary consumers with sharp discounts.

In the US, ISM PMIs remained in expansion territory in February. Manufacturing PMI rose to 60.8, up from 58.7 beforehand. This marked its highest level since August 2018. Services PMI slowed to 55.3, down from 58.7. The week wrapped up with Nonfarm Employment Change, which shined with a reading of 397 thousand, crushing the estimate of 197 thousand. The unemployment rate edged lower to 6.2%, down from 6.3%.

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

  1. BRC Retail Sales Monitor: Tuesday, 00:01. The indicator pointed to a surge in retail sales in BRC shops in January, with a gain of 7.1%. Will we see another strong reading in February?
  2. RICS House Price Balance: Thursday, 00:01. The index has weakened in recent months, with the January release showing a 50-50 split of surveyors showing an increase in house prices and those showing a decrease. For February, the estimate is that 46% of surveyors expect an increase.
  3. GDP: Friday, 7:00. The monthly GDP report showed a gain of 1.2% in December, rebounding from -2.6% beforehand. We will now receive the January data.
  4. CB Leading Index: Friday, 14:30. The index is based on 7 economic indicators. In December the index showed a small decline of 0.5%. Will we see an improvement in the January release?

Technical lines from top to bottom:

We start with resistance at 1.4163.

1.4019 has been a resistance line since late February.

1.3943 (mentioned last week) is next.

1.3821 is an immediate support level.

1.3636 has held in support since the first week in February.

1.3514 is the final support level for now.

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I am neutral on GBP/USD

The US economy is showing signs of recovery, such as the strong NFP report last week. However, the massive US stimulus program of $1.9 trillion could weigh on the US dollar.

Further reading:

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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.

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