GBP/USD Forecast Sep. 26-30

GBP/USD lost 70 points last week, as the pair closed at 1.2960 last week. This marked its lowest weekly close since early August. There are just nine events this week. Here is an outlook on the major market-movers and an updated technical analysis for GBP/USD.

The market spotlight was on the Federal Reserve last week. As expected, the Fed left rates were unchanged at 0.25%. At the same time, the Fed broadly hinted that a December hike is a strong possibility. There were no major British releases last week.

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

BBA Mortgage Approvals: Monday, 8:30. This indicator provides a snapshot of the level of activity in the housing sector. The indicator continued to lose ground in July, dropping to 37.7 thousand and missing the estimate. The downward trend is expected to continue, with an estimate of 37.2 thousand.
CBI Realized Sales: Tuesday, 10:00. The indicator jumped to plus-9 in August, indicative of stronger consumer spending. This figure was well above the forecast of minus-5. Another strong gain is predicted for September, with an estimate of plus-8 points.
BOE Deputy Governor Nemat Shafik Speaks: Wednesday, 8:05. Shafik will speak at an event in London. The markets will be listening closely, looking for hints regarding the BoE’s future monetary policy.
Net Lending to Individuals: Thursday, 8:30. The Financial Policy statement provides an analysis of the financial stability of the British banking system. The markets will be particularly interested in the economic conditions which prodded the bank to lower rates and expand the asset-purchase scheme in August.
External BOE MPC Member Kristin Forbes Speaks: Thursday, 13:00. Forbes will speak at an ECB conference in Frankfurt. A speech that is more hawkish than expected could push the pound higher.
GfK Consumer Confidence: Thursday, 23:05. The indicator improved in August to minus -7, but this figure still points to a pessimistic consumer. The forecast for August stands at minus -5.
Nationwide HPI: Friday, 6:00. Inflation has picked up in the housing sector, climbing 0.6% in August. This crushed the estimate of -0.1%. The markets are expecting a weaker gain in September, with a forecast of 0.3%.
Current Account: Friday, 8:30. This is the key event of the week. Britain’s current account deficit was almost unchanged in the first quarter, with a reading of GBP -32.6 billion. This deficit was much higher than the estimate of GBP -27.3 billion. The deficit is expected to narrow in Q2, with a forecast of GBP -30.5 billion.
Final GDP: Friday, 8:30. Final GDP is preceded by Second Estimate GDP, which posted a gain of 0.6%, matching the forecast. The estimate for Final GDP is also 0.6%.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.3012 and touched a high of 1.3121 late in the week, testing resistance at 1.3112 (discussed last week). The pair then retracted and dropped to 1.2914. GBP/USD closed the week at 1.2960.

Live chart of GBP/USD:

Technical lines from top to bottom

1.3372 was a cap in August.

1.3247 is next.

1.3112 marked a low point in June as the pound crashed after the Brexit vote.

1.3020 remains a weak resistance line.

1.2902 is an immediate support line.

1.2778 was a cushion in mid-July.

1.2612 was a cushion back in 1985. It is the final support line for now.

I remain bearish on GBP/USD.

The BoE dropped broad hints earlier this month that it plans to lower rates in November. In the US, it’s the opposite story, as the Fed could raise rates in December if key numbers remain steady. So, the greenback should continue to benefit from monetary divergence.

Our latest podcast is titled Bold BOJ vs. Fearful Fed

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer. Kenny's Google Profile

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