GBP/USD Forecast June 15-19

GBP/USD  had a spectacular week, gaining close to 300 points. The pair closed at 1.5541. There are 12 events this week.  Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

In the US, employment and consumer sentiment numbers were upbeat, but the greenback was hammered by the pound as traders were hesitant to buy the USD ahead of the Fed Statement. Even a decline in UK Manufacturing Production didn’t cause any rain on the pound’s party.

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

1. Rightmove HPI:  Monday, 23:01.  This housing inflation index provides a snapshot of activity in the UK housing sector. The index slipped to -0.1% in May, its first decline of 2015. Will the indicator rebound into positive territory in the June report?
2. CPI:  Tuesday, 8:30.CPI is the primary gauge of consumer inflation, and is closely monitored by the markets. Inflation in the UK remains anemic, and the April release pointed to deflation, with a reading of -0.1%. The May estimate stands at 0.1%.
3. PPI Input: Tuesday, 8:30.  This index is an important gauge of inflation in the manufacturing sector. in April, the indicator improved to 0.4%, but this was well short of the estimate of 0.8%. The markets are expecting the upward trend to continue, with an estimate of 0.8%.
4. RPI: Tuesday, 8:30.  This monthly indicator is very useful to analysts in tracking GDP, as official GDP data is only released on a quarterly basis. The indicator dipped to 0.4% in April, its weakest gain since March 2013.
5. CB Leading Index: Tuesday, 13:30. This index is based on 7 indicators, but is a minor event since most of the data has been previously released. The index slipped to 0.2% in the Mach release.
6. Average Earnings Index: Wednesday, 8:30. This indicator is an important gauge of consumer inflation. The index rose to 1.9% in March, within expectations. The markets are expecting a surge in the April report, with an estimate of 2.5%. Will the indicator match or beat this rosy prediction?
7. Claimant Count Change: Wednesday, 8:30. This is one of the most important releases and an unexpected reading can have a major impact on the movement of GBP/USD. The indicator softened in the April reading, with a decline of 12.6 thousand. This was much lower than the estimate of -20.5 thousand. The forecast for the May report stands at -12.5 thousand. The unemployment rate is expected to remain steady at 5.5%.
8. 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).
9. 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.
10. BOE Quarterly Bulletin: Wednesday, 23:05. This  minor indicator  is published each quarter, and the report includes commentary on the markets as well as market research and analysis.
11. Retail Sales: Thursday, 8:30. Retail Sales is a key event which should be treated by traders as a market-mover. The indicator rebounded in April, posting a gain of 1.2%. This crushed the estimate of 0.4%. The markets are bracing for a soft report in May, with a forecast of 0.0%.
12. Public Sector Net Borrowing: Friday, 8:30.  In April, the deficit narrowed to GBP 6.0 billion, its best reading in 2015. This easily beat the estimate of GBP 7.8 billion. However, the deficit is expected to balloon to GBP 10. 2 billion in the May report.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5262, and quickly touched a low of 1.5220. It was all uphill from there, as the pair climbed to a high of 1.5598, breaking through resistance at 1.5590 (discussed last week). GBP/USD closed the week at 1.5541.

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

Technical lines from top to bottom

With the pound posting sharp gains last week, we start at higher levels:

1.5909 has  held firm since November 2013.

1.5746 was an important support level in January 2013.

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

1.5590 worked as support late in 2014 and was tested last week. It is currently a weak resistance line and could see further activity early in the week.

1.5485 is the next line of support.

GBP/USD easily broke above 1.5350 as the pair posted sharp gains. This line has switched to support and is a strong line.

1.5270 capped the pair early in the year. It has switched to a support role.

1.5127 is the final support line for now.

I am bearish on GBP/USD.

The US had a bad week against its major rivals, but the FOMC statement could lead to a correction, with the Fed expected to raise rates in September. Inflation remains very low in the UK, and if this week’s inflation numbers are poor, the pound could lose some of its recent luster.

In our latest podcast, we bring you up to speed with the Fed decision and the USD impact, and also tackle the Greek crisis from two different angles.

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Further reading:

• For a broad view of all the week’s major events worldwide, read the USD outlook.
• For EUR/USD, check out the Euro to Dollar forecast.
• For the Japanese yen, read the USD/JPY forecast.
• For the kiwi, see the NZD/USD forecast.
• For the Australian dollar (Aussie), check out the AUD to USD forecast.
• For the Canadian dollar  (loonie), check out the USD to CAD  forecast.