GBP/USD rebounded last week, gaining 130 points. The pair closed at 1.2455. This week’s key events are the PMI reports. Here is an outlook for the highlights of this week and an updated technical analysis for GBP/USD.
British Second GBP for Q3 posted a gain of 0.5%, matching expectations. In the US, durable goods orders were sharp and UoM Consumer Sentiment beat expectations.Updates:
- Dec 4, 15:00: The week ahead: Mario, Matteo and two rate decisions [Video]: To taper or not to taper? This is one of the questions facing ECB President Mario Draghi, regarding the fate...
- Dec 2, 14:30: US Non-Farm Payrolls at 178K, wages slide 0.1% – USD dips: A mixed jobs report for November: 178K jobs gained within expectations, but wages fall 0.1%, worse than expected, y/y falls to...
- Dec 1, 16:00: ISM Manufacturing PMI beats with 53.2: Better than expected manufacturing sector read: a score of 53.2 in the ISM Manufacturing PMI in November. Prices paid stood...
- Dec 1, 13:21: GBP: Sterling Is Cheap But Not Cheap Enough: Where To Target? – Deutsche Bank: GBP/USD has shown remarkable resilience in the wake of the USD strength. What’s next? Here is the view from Deutsche Bank:...
- Dec 1, 9:09: Technical levels for December 2016 [Video]: November was certainly a good month for volatility, with the dollar beating the euro and the yen, as well as other...
- Nov 30, 14:15: ADP Non-Farm Payrolls beat with 216K – USD ticks up: Better than expected jobs data from the US: a gain of 216K private sector jobs in November, according to ADP. The good...
- Nov 29, 14:30: US GDP revised to 3.2% – above expectations – USD rises: Better than expected data from the US: the economy grew by 3.2% annualized in Q3 according to the updated data....
- Nov 29, 11:36: UK’s borrowing costs projected to rise at an estimated £58.7 billion: The UK’s Office for Budget Responsibility says that an estimated £58.7 billion will be needed on top of the £122...
- Nov 28, 12:56: Eyeing OPEC – Critical crude – MM #125: Oil prices are left, front and center, with a roller-coaster of rumors and a wider impact on markets: the US dollar,...
- Nov 28, 0:15: The week ahead: Action is back with the NFP, OPEC and more [Video]: After the Thanksgiving holiday, traders are set for a busy week, as we enter the final week of 2016. A...
- Nov 28, 0:12: GBP: 3 Factors Behind This Squeeze; 1.15 Remains The Trough – BofA Merrill: GBP/USD seems to have found some stability. However,the team at Bank of America Merrill Lynch lists three reasons for seeing...
GBP/USD graph with support and resistance lines on it. Click to enlarge:
- Nationwide HPI: Tuesday, 29th-30th. This housing inflation indicator dipped to 0.0% in October, short of the forecast of 0.2%. The estimate for November stands at 0.2%.
- Net Lending to Individuals: Tuesday, 9:30. Borrowing levels are positively correlated with spending levels. The indicator climbed to GBP 4.7 billion in September, and is expected to rise to GBP 4.8 billion in October.
- GfK Consumer Confidence: Wednesday, 00:01. The indicator continues to point to weak consumer confidence. The index dropped to -3 points in October and is expected to drop to -4 points in November.
- Bank Stress Test Results: Wednesday, 7:00. This test is used to gauge the stability of the banking sector and capital reserve adequacy. Previous tests have indicated a strong banking sector.
- BoE Financial Stability Report: Wednesday, 7:00. This semi-annual report provides an analysis of the stability of the British financial sector. Analysts will be especially interested in what the report has to say about the Brexit decision and the expected impact on the economy.
- Manufacturing PMI: Thursday, 9:30. The index continues to point to expansion in the manufacturing sector. The indicator came in at 54.3 points in October and little change is expected in the November report.
- Construction PMI: Friday, 9:30. This indicator improved to 52.6 in October, pointing to slight expansion in the construction sector. The forecast for the November report stands at 52.3.
* All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.2322 and quickly dropped to a low of 1.2311, as support held at 1.2272 (discussed last week). The pair then reversed directions and climbed to a high of 1.2512. GBP/USD closed the week at 1.2455.
Live chart of GBP/USD:
Technical lines from top to bottom
We start with resistance at 1.2865.
1.2778 is next.
1.2612 was a cushion back in 1985.
1.2448 is a weak support line. It could see further action early in the week.
1.2272 is next.
1.2143 has been a cushion since late November.
I am neutral on GBP/USD.
With a December hike from the Fed a virtual certainty, sentiment towards the greenback is favorable. At the same time, the pound received a boost as the BoE did not lower rates in November, as the bank acknowledged that its forecasts regarding fallout from Brexit were overly-pessimistic.
Our latest podcast is titled Eyeing OPEC – Critical crude
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- 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.