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GBP/USD  posted gains for a second straight week, rising about 85 points. The pair closed the week at 1.5520.  There are just four releases this week. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

In the US,  the Federal Reserve kept the markets guessing till the very last minute, but in the end refrained from raising rates. US unemployment claims were  better than expected,  but  the  Philly Manufacturing Index  posted a sharp decline, well below expectations. Over in the UK, there was positive news on the job front, as wages growth jumped and unemployment claims beat expectations.

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

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

GBP_USD_Forecast.Sep21-25.

 

  1. Rightmove HPI:  Sunday, 23:01. This housing price index provides a snapshot of the level of activity in the UK housing sector. The indicator has been slipping, and posted a decline of 0.8% in August, its first decline in  3 months. Will the downward trend continue in September?
  2. Public Sector Net Borrowing:  Tuesday, 8:30. The indicator looked very sharp in July, with a reading of GBP -2.1 billion, within expectations. This marked the indicator’s first surplus in 6 months. However, the markets are expecting a large deficit in the August  reading, with an estimate of GBP 8.7 billion.
  3. CBI Industrial Order Expectations:  Tuesday, 10:00. The index is based on a survey of UK manufacturers. The indicator has been struggling, posting 4 straight declines. Still, the August reading of -1 point was much better than the forecast of -10 points. The estimate for the September report stands at 0 points.
  4. BBA Mortgage Approvals:  Thursday, 8:30.  This event is a leading indicator of housing market demand. The indicator has now improved over seven consecutive readings, and the July release of 46.0 thousand matched the forecast. The markets are expecting a slight improvement for August, with the estimate standing at 46.3 thousand.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5445 and  touched a  low of 1.5328 early in the week. The pair then reversed directions, pushing  to a high of 1.5658, as resistance held firm  at 1.5682  (discussed last week).  The pair closed the week at 1.5520.

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

Technical lines from top to bottom

We begin with 1.6006, which  is protecting the symbolic 1.60 level.

1.5909 has  held firm as resistance since June.

1.5825 was an important cap in November 2014.

1.5769 is the next resistance line.

1.5682 held firm as the pound posted strong gains. This line was a key resistance line  in December 2014 and January 2015.

1.5590  is  an immediate line  of  resistance.

1.5485  has switched to a support level. It is a weak line and could see more action early in the week.

1.5341  continues to be  busy, and was tested in support as the pair lost ground before the pound recovered.

1.5269 is next. It  was an important support level in March.

1.5163 is a strong support level.

1.5026 has provided support since April and is the final support line for now. It is protecting the symbolic line of 1.50.

I am  neutral on GBP/USD.

After a disappointing month of August, the pound has reversed directions and posted  a strong rally  against the greenback.  The Fed non-decision took some air out of the dollar’s tires, and the ensuing market disappointment could bolster the pound.

In our latest podcast we explain why the dollar defies the doves

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