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GBP/USD lost about a cent on  the week, as the pair  closed at 1.5230. This week’s highlight is Preliminary GDP.  Here is an outlook of the events and an updated technical analysis for GBP/USD.

British data continues to worry the markets. Although unemployment claims fell nicely, this was offset by an increase in the unemployment rate. Retail Sales dropped sharply, and CPI continues to be high, running at close to 3%.

Updates: BOE Deputy Governor Paul Tucker spoke at a financial forum in New York.  Public Sector Net Borrowing looked awful, as the deficit ballooned to 16.7 billion pounds, way above the  estimate of 14.3 billion pounds. CBI Industrial Order Expectations fell to -25 points, much worse than the estimate of -25 points. External BOE MPC Member Ian McCafferty spoke in Coventry. GBP/USD is steady, as the pair was trading at 1.5243.

GBP/USD graph with support and resistance lines on it. Click to enlarge:   GBP USD Forecast Apr 22-26

 

  1. BOE Deputy Governor Paul Tucker Speaks:  Monday, 18:30. Tucker will be addressing a financial forum in New York. A speech that is considered more hawkish than expected is bullish for the British pound.
  2. Public Sector Net Borrowing: Tuesday, 8:30. In March, the indicator posted a deficit of 4.4 billion pounds, which was smaller than the estimate of 8.4 billion. However, the markets are bracing for a much higher reading in April , with the forecast calling for a deficit of 13.9 billion pounds.
  3. CBI Industrial Order Expectations: Tuesday, 10:00. This manufacturing index has been mired deep in negative territory, indicating that surveyed manufacturers are expecting lower order volumes. The index came in at -15 points in March, and little change is expected in the upcoming reading.
  4. BBA Mortgage Approvals: Wednesday, 8:30. The indicator has been falling in recent readings, indicative of less demand in the UK housing sector. The markets are expecting a slight rise in April, with an estimate of 31.2 thousand.
  5. CBI Realized Sales: Wednesday, 10:00. This consumer spending index is in free-fall, with a drop for 33 points in November 2012 to 0 in March. The markets are expecting the index to turn around in April, with an estimate of 7 points.
  6. Preliminary GDP: Thursday, 8:30. GDP is the major event of the week. The indicator has looked sluggish in recent readings, posting only one positive reading in the past five releases. The markets are expecting a marginal increase of 0.1% in the upcoming reading.

 

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5353. The pair  touched a high of 1.5385, as resistance at 1.5406 (discussed last week) held firm.  The pair  then sagged in mid-week, dropping to a low of 1.5217.  GBP/USD closed the week at 1.5230.

Technical lines from top to bottom:

We  begin with resistance at    1.5827. This is followed by 1.5750. This resistance line saw a lot of activity in the first half of February, before the pound began a dive which lasted until mid-March. This is followed by resistance at 1.5648. Below, there is resistance at 1.5560. This  line has remained in place since mid-February. This is followed by resistance at 1.5484. Next, there is resistance at 1.5416. This line held firm as the pair edged higher early in the week. There is weak resistance at 1.5258, and we could see this line face pressure early in the week.

GBP/USD is receiving support at 1.5189.  Below, there  is a support line at 1.5061,   which was tested in the first week of April.  This is followed by 1.5010, protecting the all important 1.50 level. We next encounter support at 1.4896, just below the round number of 1.49. Below this is  support at  1.4765, which has remained intact since June 2010. The finals support level for now is at 1.4665.

I remain bearish on GBP/USD.

The markets remain  downbeat  on  the  British economy, and this was underscored by the Fitch Rating Agency downgrading the UK, citing a weaker economic and fiscal outlook in the UK. Weak data out of the UK could push the pound lower, especially a weak GDP release.

Further reading: