GBP/USD posted a winning week for a third straight time. It’s a light calendar this week, with two releases. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.
In the UK, employment data improved. The number of unemployed persons fell by 15.1 thousand, compared to an expected rise of 25.6 thousand. Unemployment fell for a third straight month, dropping from 4.9% to 4.8%. Wage growth remained strong at 4.0%, but this was lower than the forecast of 4.5%.
Inflation was higher in April, as the reopening of the economy has led to increased economic activity. Headline inflation climbed to 1.5% in April, up sharply from 0.7% beforehand. Core CPI rose to 1.3%, up from 1.1%.
In the US, the Philly Fed Manufacturing Index slowed to 31.5, down sharply from 50.2 and shy of the forecast of 40.8. Unemployment claims fell for a third straight week, coming in at 444 thousand versus 478 thousand a week earlier. The Manufacturing PMI was up slightly to 61.5, above the forecast of 60.0. The Services PMI sparkled with a read of 70.1, as the business sector showed unprecedented growth. This beat the estimate of 64.3. The 50-level separates expansion from contraction.
GBP/USD daily chart with support and resistance lines on it. Click to enlarge:
- Public Sector Net Borrowing: Tuesday, 6:00. The budget deficit has been steadily growing, as the government spends more money to support the post-Covid recovery. The deficit rose to GBP 27.2 billion in March but is expected to narrow to GBP 13.5 billion in April.
- CBI Realized Sales: Tuesday, 10:00. After a string of six successive declines, sales volume increased in April, with a solid gain of 20. The upswing is forecast to continue, with a consensus of 28 for May.
Technical lines from top to bottom:
1.4357 has provided resistance since April 2018.
1.4269 (mentioned last week) is next.
1.4180 was tested during the week.
1.4070 is the first support level.
1.3909 is next.
1.3826 is the final support level for now.
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I remain bullish on GDP/USD
The pound touched multi-month highs this week, and the UK recovery continues to gather steam as the reopening continues. This bodes well for the British pound.
Further reading:
- EUR/USD forecast – for everything related to the euro
- USD/JPY forecast – projections for dollar/yen
- AUD/USD forecast – predictions for the Aussie dollar
- USD/CAD forecast – Canadian dollar analysis
- Forex weekly forecast – Outlook for the major events of the week
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