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GBP/USD  reversed directions last week,  posting modest gains. The pair closed the week at 1.5581. This week’s highlight is Retail Sales. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

In the US, retail sales  was dismal  and consumer sentiment fell short of expectations. Over in the UK, inflation numbers remain low while unemployment claims was much higher than expected, hurting the pound.

[do action=”autoupdate” tag=”GBPUSDUpdate”/]

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

GBP_USD_Forecast.July20-24

  1. Rightmove HPI:  Sunday, 23:01. This housing inflation indicator provides a snapshot of the level of activity in the UK housing sector. The index jumped 3% in the June reading. Will the indicator repeat with another strong gain in the July release?
  2. Public Sector Net Borrowing:  Tuesday, 8:30. The  May deficit ballooned to GBP 9.4 billion pounds, This was up from GBP 6.0 billion a month earlier, but was better than expected. The  markets are expecting the  deficit to narrow to GBP 8.6 billion pounds in the July report.
  3. MPC Official Bank Rate Votes: Wednesday, 8:30. The BOE held rates at 0.50% at its most recent policy meeting, and the MPC vote is expected to be unanimous (9-0).
  4. MPC Asset Purchase Facility Votes: Wednesday, 8:30. The MPC vote for QE is also expected to be a 9-0 vote. The BOE held QE at 375 billion pounds at the last policy meeting.
  5. Retail Sales: Thursday, 8:30. Retail Sales is a key event which should be treated by traders as a market-mover. The indicator  softened in May to 0.2%, which was within expectations. The estimate for the June report stands at 0.4%.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5512, and  dipped to a low of 1.5450, as the pair tested support at 1.5485 (discussed last week). The pair then reversed directions, climbing to a high of 1.5675. GBP/USD then retracted, closing the week at 1.5581.

Live chart of GBP/USD: [do action=”tradingviews” pair=”GBPUSD” interval=”60″/]

Technical lines from top to bottom

We  begin with resistance at 1.6006, just above the symbolic 1.60 level.

1.5909 has  held firm as resistance since November 2013.

1.5769 is the next resistance line.

1.5682  was an important cap in December 2014 and January 2015.

1.5590 saw action last week and is currently a weak resistance line.

1.5485 was tested and is an immediate support level.

1.5341 is  the next support line. It has held firm since mid-June.

1.5269 was an important support level in March.

1.5163 is the final line of support for now.

I am  neutral on GBP/USD.

Recent US numbers have been lukewarm,  as  underscored by last week’s retail sales and consumer  confidence.  However, Yellen’s relatively upbeat comments  indicate that a rate hike is not far away. The Greek crisis appears to be over, at least for now, and this is bullish for the pound, with its close ties with the Eurozone.

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