GBP/USD reversed directions and posted modest gains this week. The pair closed at 1.2776. There are 7 events this week. Here is an outlook for the highlights of this week and an updated technical analysis for GBP/USD.
British inflation levels continue to rise, but wage growth and unemployment rolls missed their estimates. As well, retail sales posted a second decline in three months, raising concerns about consumer spending. This hurt the pound, but the currency rebounded as three members of the BoE voted to raise rates, although the majority prevailed and the BoE held rates at 0.25%. Over in the US, the Fed raised rates and the rate statement was more hawkish than expected, disregarding lower inflation.Updates:
- Jun 24, 18:10: GBP/USD: High uncertainty amid the Brexit Anniversary: One year after Britain voted to leave the European Union, GBP/USD is still lower. What’s next amid this uncertainty? Here...
- Jun 23, 9:40: Brexit Birthday – wrapping up a tumultuous year in GBP/USD: The former leader of UKIP, Nigel Farage, wanted to make June 23rd a holiday to celebrate “Independence Day”. There are...
- Jun 21, 17:31: GBP: Here Is Why Further Downside Is Likely Limited From Here – BTMU: The pound jumps and falls on central bankers’ musings. What’s next? Here is their view, courtesy of eFXnews: BTMU FX...
- Jun 21, 13:04: GBP/USD breaks high resistance on hawkish Haldane: The Bank of England continues providing volatility. Last week, the MPC saw three votes for a rate hike, boosting the...
- Jun 21, 10:24: GBP/USD extending losses on UK political uncertainty: Pound/dollar already erased the election announcement gains, falling to the lowest levels in two months. We listed 3 reasons for...
- Jun 21, 9:36: On fundamentals, technicals and more – interview with Dale Pinkert: I had the privilege to be interviewed by Dale Pinkert of F A C E. We talked about major currencies,...
- Jun 20, 19:36: GBP/USD erasing the election announcement gain – 3 reasons: GBP/USD is trading around 1.2620, after having dipped to a low of 1.2603. 1.2615 was the swing high seen in...
- Jun 20, 10:06: Carney carnage: GBP/USD falls on rejection of rate rises: Mark Carney said that this is not the time to raise rates. He contradicts three of his peers in the...
- Jun 20, 7:21: GBP: Further Downside Near-Term; What’s The Trade? – BofAML: Brexit talks have begun with the UK caving into the EU demand that talks begin around the divorce agreement, then...
- Jun 19, 12:42: Fed faking it until they make it? + a Brexit brawl – MM #148: The Fed not only raised rated but put on very rosy glasses. We poke holes into the “off one” factors...
- Jun 19, 12:13: EUR/GBP: Mind The Divergence – Where To Target? – SocGen: The “Brexit currency pair” has periods of high volatility and times of stability. The growing divergence could provide an opportunity...
GBP/USD graph with support and resistance lines on it. Click to enlarge:
- Rightmove HPI: Sunday, 23:01. This housing inflation indicator edged up 1.2% in May, up from 1.1% a month earlier.
- BoE Governor Mark Carney Speaks: Tuesday, 7:30. Carney will deliver a speech in London. Analysts will be looking closely for any hints of a rate hike later this year.
- Public Sector Net Borrowing: Wednesday, 8:30. The budget deficit ballooned to GBP 9.6 billion in April, above the forecast of GBP 8.0 billion. The deficit is expected to narrow to GBP 7.3 billion in May.
- MPC Member Andy Haldane Speaks: Wednesday, 11:00. Haldane will speak at an event in Yorkshire. As the chief economist of the BoE, his comments are closely watched by the markets.
- CBI Industrial Order Expectations: Thursday, 10:00. The indicator improved to 9 points in May, crushing the estimate of 4 points. The forecast for June stands at 7 points.
- 30-y Bond Auction: Thursday, Tentative. The 30-y yield has been dropping, and came in at 1.79% in the March auction. Will we see an upswing in June?
- MPC Member Kristin Forbes Speaks: Thursday, 18:00. Forbes will speak at an event at the London Business School. A speech which is more hawkish than expected is bullish for the British pound.
*All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.2713 and dropped to a low of 1.2639. The pair then dropped to a low of 1.2639, as support held at 1.2616 (discussed last week). GBP/USD recovered and closed the week at 1.2776.
Technical lines from top to bottom
1.3247 has held in resistance since September 2016.
1.3112 marked a low point in June 2016 as the pound crashed after the Brexit vote.
1.3020 is protecting the symbolic 1.30 level.
1.2902 is next.
1.2775 is providing support just below the line of 1.2776, where the pair closed the week.
1.2616 is next.
1.2512 has provided support since April.
1.2404 is the final support level for now.
I am bearish on GBP/USD.
The UK political landscape remains fluid, and the start of Brexit negotiations could get off to a rocky start. The US economy remains strong, and the Fed’s upbeat rate statement marked a significant vote of confidence in the US economy.
Our latest podcast is titled Fed faking it until they make it? + a Brexit brawl
- 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.