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GBP/USD  reversed directions last week and posted strong gains. The  pair gained about 150 points and closed at 1.4343. This week’s highlight is the EU Membership referendum. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

In the UK, Retail Sales posted a strong gain and beat expectations.  In the US, the Fed held rates and gave no hints about a rate hike. Retail Sales were within expectations, while inflation levels remain low, as underscored by last week’s CPI reports.

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

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

GBPUSD_ Daily Chart June20-24..

  1. Rightmove HPI: Monday, 23:01. This indicator provides a snapshot of the level of activity in the housing sector. The index posted a soft gain of 0.4% in June, following two straight gains of 1.3%.
  2. Public Sector Net Borrowing: Tuesday, 8:30. The budget deficit widened considerably in April, rising to GBP 6.6 billion pounds. This was slightly higher than the estimate of GBP 6.3 billion. The upward trend is expected to continue in May, with the estimate standing at GBP 9.5 billion pounds.
  3. CBI Industrial Order Expectations: Tuesday, 10:00.  This manufacturing indicator continues to post sharp declines, pointing to a struggling manufacturing sector. The indicator came in at -8 points in May, better than the forecast of -13 points. The forecast for the June report stands at -10 points.
  4. EU Membership Vote: Thursday, All Day. This referendum vote, popularly known as “Brexit”, could have huge ramifications for the financial and global markets. With a close vote a likely scenario, traders can expect the pound to have a volatile week.
  5. BBA Mortgage Approvals: Friday, 8:30. The indicator dipped to 40.1 thousand in April, well short of the forecast of 44.8 thousand. The downward trend is expected to continue, with an estimate of 37.9 thousand.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.4186 and climbed to a high of 1.4387. The pair then reversed directions and dropped to a low of 1.4010, testing support at 1.4036 (discussed last week). The pair closed the week at 1.4343.

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

Technical lines from top to bottom

We start with resistance at 1.4752. This line was a cushion in May 2009.

1.4635 is next.

1.4562 has strengthened was tested in resistance last week.

1.4413  is an immediate resistance line.

1.4297 is providing support.

1.4148 has some breathing room following strong gains by GBP/USD.

1.4036 has been a support line since early April.

1.3912 is the final support level for now.

I am neutral on GBP/USD.

The Brexit vote could see sharp volatility leading up the vote, with the outcome very much in the air. A vote to leave the EU will have huge ramifications for the UK and the continent, and could see the pound drop sharply. Conversely, a vote to remain in the EU would likely be bullish for the pound.

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