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GBP/USD  showed some strength late in the week but was unable to consolidate and ended the week almost unchanged. The pair closed at 1.5252. This week’s highlight is the Manufacturing Production. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

There was some positive news out of the US, which posted an  excellent NFP report. However,  PMI releases were a mixed bag. In the UK, PMIs were not as strong as expected, and the BOE made no changes to the benchmark interest rate.

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

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

GBP_USD_Forecast.June8-12

  1. BRC Retail Sales Monitor:  Monday, 23:01.  This indicator measures the change in retail sales in BRC shops, and is a useful indicator of consumer spending, which is a key component of economic growth. The indicator posted a sharp decline of 2.4% in April, its first decline in 4 months.
  2. Trade Balance:  Tuesday, 8:30.  Trade Balance is closely linked to currency demand, as foreigners purchase British exports with British pounds. The indicator showed little change in the April release, posting a deficit of 10.1 billion pounds, within expectations. Little change is expected in the May report.
  3. Manufacturing Production: Wednesday, 8:30. This is the key event of the week, and should be treated by traders as a market-mover. The indicator was unchanged in the March report, posting a modest gain of 0.4%, within expectations. The markets are expecting a weak gain of 0.1% in the April release.
  4. NIESR GDP Estimate: Wednesday, 14:00.  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. BOE Governor Mark Carney Speaks: Wednesday, 20:00.  Carney will deliver remarks at an event in London. Analysts will be listening carefully, looking for clues as to the BOE’s future interest rate policy.
  6. RICS House Price Balance: Thursday, 23:01.  This indicator provides a snapshot of the level of activity in the UK housing sector. The indicator has been improving in 2015, and came in at 33% in the April release. Little change is expected in the May report.
  7. 30-year Bond Auction: Thursday, Tentative. Yields on 30-year bonds has been dropping, and the yields at the most recent auction in April came in at 2.34%.
  8. Construction Output: Friday, 8:30. This  minor indicator has been alternating between gains and losses. The March release looked sharp with a 3.9% gain, which was within expectations. However, a weak gain of just 0.1% is the estimate for the April report.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5286, and quickly touched a low of 1.5162, as resistance  remained firm at 1.5485. The pair then reversed directions, climbing to a high of 1.5441, as resistance held firm at 1.5485 (discussed last week). GBP/USD was unable to hold onto these gains and closed the week at 1.5252.

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

Technical lines from top to bottom

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

1.5590 worked as support late in 2014 and is a pivotal line in the current range.

1.5485  held firm as the pound showed some strength during the week before retracting.

1.5425 is the next line of resistance.

1.5350 worked as resistance in January and was a stepping stone on the way up later on.

1.5270 capped the pair early in the year. It is a weak line of resistance.

1.5127 is the next support line.

1.5008 is the last level before the  psychologically important  1.50 level.

1.4911 was an important line of support in mid-April.

1.4813 is the final support level for now. This line  marked the start of a pound rally in July 2013 that saw GBP/USD climb above 1.61.

I am  bearish on GBP/USD.

The US dollar continues to show broad strength, and the strong job numbers last week could be the sign of stronger data in Q2. The Fed is expected to raise rates in September, and the divergence in monetary policy will likely weigh on the pound.

In this week’s podcast, we explain why EUR rallied on Draghi, what’s next, discuss oil and gas, run through the Plus500 story and preview next week’s events.

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