Search ForexCrunch

GBP/USD  continues to rally, as the pound jumped about  100 points last week. The pair  closed at 1.5431. This week’s  major event is Retail Sales. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

The UK posted strong  job numbers last week and this was enough to overcome the weak negative UK CPI. All in all, the economy in Britain looks OK. This, combined with poor retail sales and weak manufacturing data out of the US helped the pound continue  to  rally last week.

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

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

GBP_USD_Forecast.Oct19-23

 

  1. Rightmove HPI:  Sunday, 23:01. This indicator provides a snapshot of the level of activity in the UK housing sector. The index bounced back in September with a respectable gain of 0.9%.
  2. BOE Governor Mark Carney Speaks:  Tuesday, 10:00.  Carney will testify before the Treasury Select Committee in London. Any clues as to future interest rate moves could have a strong impact on the movement of GBP/USD.
  3. Public Sector Net Borrowing:  Wednesday, 8:30. The indicator has posted monthly deficits for most of 2015. In August, the indicator posted a deficit of GBP 11.3 billion, well above the estimate of  GBP 8.7 billion  and  marking the  highest deficit recorded in 2015. Another high deficit is expected in the October report, with an estimate of GBP 9.1 billion.
  4. Retail Sales:  Thursday, 8:30. Retail Sales is the key event of the week and should be treated by traders as a market-mover. The indicator edged upwards to 0.2% in August, matching the forecast. The estimate for September stands at 0.3%.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5320 and  touched  a  low of 1.5199.  The pair then reversed directions,  climbing to a  high of 1.5509,  as  it tested  resistance at 1.5485  (discussed last week).  The pair closed the week at 1.5431.

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

Technical lines from top to bottom

With the pound moving to higher levels, we start at higher levels:

1.5909 has  held firm  in resistance since June.

1.5825 was an important cap in November 2014.

1.5769 is the next resistance line.

1.5682 was a key resistance line  in December 2014 and January 2015.

1.5590 is the next line of resistance.

1.5485 was a cap in the first half of September.

1.5341  was tested again this week. It is an immediate support line.

1.5269  has strengthened in support as the  GBP/USD trades at higher levels.

1.5163 is the final support level for now.

I am  neutral on GBP/USD

The US  may be  moving away from a rate hike in 2015, and this could boost rival currencies such as the pound. Still the US economy is stronger than that of the UK, and  weak global conditions  may lead to more investors seeking safety with the US dollar and ditching the British pound.

In our latest podcast we analyze Varoufakis’ 4 problems and 4 solutions, and more

Follow us on Sticher or on iTunes

Further reading: