GBP/USD posted sharp gains last week, gaining 180 points. The pair closed at 1.280. There are 10 events this week. Here is an outlook for the highlights of this week and an updated technical analysis for GBP/USD.
The Federal Reserve raised rates last week, the first of several expected hikes this year. However, the US dollar suffered broad losses (here are 5 reasons why the dollar dropped). US CPI and Retail Sales were soft but met expectations. In the UK, the BoE held rates at 0.25%, but a dissenting vote in the rate decision helped send the pound downward.Updates:
- Mar 23, 10:30: Brits are back to buying: retail sales jump 1.4% – GBP follows: Brits are back to buying: a rise of 1.4% in headline sales in February, much better than expected. While this is accompanied...
- Mar 23, 9:20: EURUSD, GBPUSD and USDJPY TA – March 23 2017: EURUSD intra-day analysis EURUSD (1.0789): EURUSD continues to hover near the 1.0800 support/resistance level although the chart pattern indicates...
- Mar 23, 8:25: Technical levels for currency pairs – Early Spring edition: The birds are chirping, the leaves are green but the greenback is on the back foot. What technical levels should...
- Mar 22, 10:01: EURUSD, GBPUSD and USDJPY TA – March 22 2017: EURUSD intra-day analysis EURUSD (1.0800): EURUSD is looking increasingly at risk of a downside correction following the strong rally...
- Mar 22, 7:51: GBP/USD tops 1.25 on extended USD sell-off, UK inflation echoes: The sell-off of the greenback continues into the wake of the European session and the pound is there to take advantage....
- Mar 21, 18:25: USD beaten by majors – update on three pairs: Nearly a week after that “dovish hike” from the Federal Reserve, the US dollar continues reeling. That decision had five...
- Mar 21, 12:18: EURUSD, GBPUSD and USDJPY TA – March 21 2017: EURUSD Price consolidated yesterday as directional catalysts have subsided in the wake of the ECB/ FOMC meetings. Local resistance at...
- Mar 21, 10:30: UK inflation jumps to 2.3% – GBP jumps: Higher than expected inflation in the UK. Month over month CPI rises by 0.7%, pushing the year over year CPI to...
- Mar 20, 13:25: GBP/USD: Trading the British CPI: British CPI, released each month, is the primary gauge of consumer inflation and is keenly anticipated by the markets. A reading which...
- Mar 20, 12:12: The art of the dovish hike – MM #138: The Ides of March proved to be ominous for dollar bulls as the Fed succeeded in beating the greenback while hiking rates....
- Mar 20, 9:53: EURUSD, GBPUSD and USDJPY TA – March20 2017: EURUSD Short covering rally continues. Local resistance at the January high of 1.0828 is the first challenge. Above their puts...
- Mar 20, 8:16: GBP/USD extends gains, approaching high resistance: The British pound enjoys another round of buying following the BOE’s hawkish tilt last week, as well as the Federal Reserve’s dovish...
- Mar 20, 0:56: What’s Next For USD, EUR, GBP? – BofA Merrill: The Federal Reserve said its word, and it was a dovish hike. What’s next? Here is their view, courtesy of...
- Mar 20, 0:20: The week ahead: Fed hangover, durables, and Brexit speculation [Video]: The Fed decision, as well as the other ones, will continue reverberating in markets for a while. A lighter calendar...
GBP/USD graph with support and resistance lines on it. Click to enlarge:
- Rightmove HPI: Monday, 00:01: This indicator provides a snapshot of the level of activity in the housing sector. The index posted a strong gain of 2.0% in February.
- CPI: Tuesday, 9:30. CPI is the most important inflation indicator and should be treated as a market-mover. The index continues to rise and came in at 1.8% in January, above the forecast of 1.4%. The upward swing is expected to continue, with an estimate of 1.9%.
- PPI Input: Tuesday, 9:30. This indicator measures inflation in the manufacturing sector. The index posted a strong gain of 1.7% in January, above the forecast of 1.0%. The markets are braced for a weak gain of 0.2% in February.
- Public Sector Net Borrowing: Tuesday, 9:30. The indicator rebounded in January, posting a surplus of GBP 9.8 billion. Still, this fell short of the estimate of GBP 14.4 billion. The estimate for the February reading is a deficit of GBP 2.9 billion.
- RPI Input: Tuesday, 9:30. RPI includes housing costs, which are excluded from CPI. In January, the index edged up to 2.6%, short of the forecast of 2.8%. The upward swing in expected to continue, with an estimate of 2.9%.
- CBI Industrial Order Expectations: Tuesday, 11:00. The indicator continues to improve and gained 8 points in February. Will the upswing continue in the March report?
- 30-y Bond Auction: Wednesday, Tentative. 30-year bonds dipped to 1.86% in February, down from 1.96% in the previous auction.
- Retail Sales: Thursday, 9:30. Retail Sales is the primary gauge of consumer spending and should be treated as a market-mover. In January, the indicator declined 0.3%, missing expectations. The estimate for February stands at 0.4%.
- CBI Realized Sales: Thursday, 11:00. The indicator rebounded in February, with an estimate of 9 points. The estimate for March stands at 4 points.
- BBA Mortgage Approvals: Friday, 9:30. The indicator provides a snapshot of the strength of the housing sector. In January, the indicator rose to 44.7 thousand, above expectations. The forecast for the February report is 44.9 thousand.
* All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.2169 and dropped to a low of 1.2106. The pair then reversed directions and climbed to a high of 1.2405, testing resistance at 1.2385 (discussed last week). GBP/USD closed the week at 1.2380.
Live chart of GBP/USD:
Technical lines from top to bottom
We start with resistance at 1.2706
1.2511 is next.
1.2385 is a weak resistance line. It could see further action early in the week.
1.2218 is providing support.
1.2080 is protecting the symbolic 1.20 level.
1.1943 marked the low point in October 2016. It is the final support level for now.
I am bearish on GBP/USD.
The Federal Reserve pushed the rate trigger and more moves are expected this year. With the Bank of England maintaining a neutral policy regarding rate movement, monetary divergence continues to favor the greenback. The US economy continues to perform well, so sentiment for the US dollar remains strong.
Our latest podcast is titled The Art of the Dovish Hike
- 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.