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GBP/USD  continued its losing ways last week, as the pound lost 220 points. There are  eight events on the schedule. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

Key US  indicators  could have been sharper last week, as  unemployment claims and housing data missed expectations. There was better news from consumer confidence, which beat the forecast. There were no major British releases last week.

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

AUD_USD Forecast-Jan11-15

  1. BRC Retail Sales Monitor: Tuesday, 00:01.  This housing inflation indicator provides a snapshot of the health of the activity of the UK housing sector. The index  has been steady, posting identical readings of 49% in the past two months, both of which  beat the estimate.
  2. Manufacturing Production: Tuesday, 9:30. This is the first key event of the week. The indicator disappointed in November with a decline of -0.4%, weaker than the forecast of -0.1%. The estimate for the December report stands at 0.1%.
  3. NIESR GDP Estimate: Tuesday, 15:00. This indicator helps analysts gauge GDP, which is officially released only on a quarterly basis. The indicator has been steady, posting two consecutive readings of 0.6%.
  4. Official Bank Rate: Thursday, 12:00. The BOE is expected to hold the benchmark interest rate at 0.50%. The central bank will also release the vote on the  November rate decision, which is expected to remain at 8 members in favor of holding the current rate level, and one member in favor of raising rates.
  5. Monetary Policy Summary: Thursday, 12:00. This report provides details about previous BOE policy meetings and could provide clues about future moves.
  6. Asset Purchase Facility: Thursday, 12:00. The BOE is expected to hold QE at 375 billion pounds. The vote of the previous QE decision will also be released. It is expected to remain unanimous, with all 9 members voting in favor of maintaining the current level.
  7. BOC Credit Conditions Survey: Friday, 9:30. Credit levels reflect the strength of consumer confidence and spending, so this  report could impact on the movement of GBP/USD. The report is released each quarter.
  8. CB Leading Index: Friday, 14:30. The index is based on 7 economic indicators, but is considered a minor event since most of the data has already been released. The indicator has struggled, posting back-to-back declines. Will the index rebound into positive territory in the November report?

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.4736 and quickly touched a  high of 1.4815. The pair  reversed directions and dropped sharply  during the week,  touching a low of 1.4506. This  broke below support at 1.4562 (discussed last week).  GBP/USD closed the week at 1.4516.

Technical lines from top to bottom

With the pound sustaining sharp losses, we begin at lower levels:

1.5026  is a strong resistance line.

1.4856 has strengthened in resistance following the pound’s sharp losses.

1.4752 is the next resistance line.

1.4562 has reverted to a resistance role.  This  line had held as a support line since June 2010.

1.4346 was a cushion in June 2010.

1.4227 is the next support level.

1.4135 marked a low point in December 2001. It is the final support line for now.

I am  bearish  on GBP/USD.

The US dollar  has surged against the pound over the past two months, and this trend has continued early in the New Year. The Fed could raise rates again as early as March, while any BOE plans to raise rates are on hold, perhaps until 2017. This monetary divergence and a strong US economy favor the dollar continuing to make gains against the pound, which many analysts believe is overvalued.

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