GBP/USD rose 1.32%, its highest one-week gain of the year. The upcoming week has four releases, including GDP. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.
In the UK, PMIs for manufacturing, services and construction all came in above the 60-level, well into expansionary territory. A reading above the 50-level indicates growth.
The Bank of England slowed the pace of QE, from 4.4 billion pounds a week to 3.3 billion, but stressed that this was not a tightening of policy. The bank maintained interest rates at a record low of 0.10%.
In the US, manufacturing activity grew at a slower pace in April, as the ISM Manufacturing PMI dropped to 60.7, down from 64.7. It was a similar story for business activity, as the ISM Services PMI slowed to 62.7, down from 63.7. Both PMIs missed their estimates.
The market was looking for a blowout report from nonfarm payrolls for April, with an estimate of 990 thousand. Some analysts had even predicted a print of two million, but in the end, the economy created just 266 thousand jobs. Unemployment rose to 6.1%, up from 5.8% and above the estimate of 6.0%. There was a silver lining, as wage growth climbed 0.7%, rebounding from -0.1% and above the forecast of 0.0%.
- BRC Retail Sales Monitor: Monday, 23:01. BRC retailers reported a massive gain of 20.3% in March, as the government reopening of the economy boosted the services sector. The estimate for April stands at 9.3%.
- GDP: Wednesday, 6:00. The economy grew by 1.0% in Q4, but a downturn is expected in the first quarter, with a consensus of -1.6%.
- RICS House Price Balance: Wednesday, 23:01. The UK housing market remains strong. In March, 59% of surveyors reported a price increase, and this is projected to rise to 62% in April.
- CB Leading Index: Friday, 13:30. The index, based on 7 economic indicators, fell by 0.4% in February. Will we see an improvement in the March data?
Technical lines from top to bottom:
We start with resistance at 1.4070.
1.3956 is next.
1.3824 (mentioned last week) is the first support level.
1.3726 is next.
1.3612 is the final support level for now.
I am bullish on GDP/USD
The US dollar is running into some turbulence, and a further reopening of the UK economy could lift the pound.