The upcoming week is packed with events, with PMI figures in the limelight. Here’s an outlook for the British events, and an updated technical analysis for GBP/USD.
GBP/USD daily chart with support and resistance lines marked. Click to enlarge:
The Pound dived lower in the past week, but managed to recover, with a boost coming from an upwards revision of GDP for the second quarter. Will it continue higher?
- Halifax HPI: Publication time unknown at the moment. This house price index, is one of the most accurate available, as it’s based on internal data from HBOS, one of the biggest banks in the UK. According to the bank, a three month slump in house prices stopped last month with a neat 0.6% rise. A smaller rise is expected this time.
- GfK Consumer Confidence: Published on Monday at 23:00 GMT. 2000 consumers are surveyed by GfK for this important survey. After reaching minus 14 points, confidence deteriorated steadily back to minus 22, the worst in 11 months. Another dip is expected now, with the number dropping to minus 23.
- Net Lending to Individuals: Published on Tuesday at 8:30 GMT. Borrowing by individuals is necessary to boost the economy. It unexpectedly dropped last month to 600 million, about half of early expectations, disappointing the Pound. A rise to 700 billion is predicted now.
- Manufacturing PMI: Published on Wednesday at 8:30 GMT. This survey of 600 purchasing managers always rocks the Pound. In recent months, it has been quite strong, going hand in hand with the UK’s economic strength. It’s now expected to dip from 57.3 to 57.1 points. Any result will rock the Pound.
- Nationwide HPI: Published on Thursday at 6:00 GMT. This figure was delayed from last week. The Nationwide House Prices are considered to be an accurate measure of house prices, even though they’re not the first to publish them. In the past two months, prices disappointed and even unexpectedly fell by 0.5% last month. As other indicators show the same trend, another fall is expected now – by 0.3%.
- Construction PMI: Published on Thursday at 8:30 GMT. The construction sector took more time in recovering from the recession, but when it did, this survey of purchasing managers showed very strong results, rising quickly to 58 points. Last month it unexpectedly dropped to 54.1 points, and is now expected to stay at a similar level.
- Paul Tucker talks: Starts speaking on Friday at 00:45 GMT, in a conference in Seoul. The BOE Deputy Governor is an influential member of the MPC, and often joins the BoE governor on testimonies in the parliament. He might contribute to the debate about British inflation and the chances of a double dip recession, that currently seems unlikely in Britain.
- Services PMI: Published on Friday at 8:30 GMT. The all-important services sector closes the PMI releases for this week. In the past two months, the score came lower than predicted, but managed to remain above the critical 50 point mark, indicating economic expansion. It’s now expected to remain at similar levels to last month’s number – at 53.1 points.
GBP/USD Technical Analysis
The British Pound began the week with a significant downfall, first losing the 1.5520 line and quite quickly the 1.5470 line. Both were mentioned in last week’s outlook. The 1.5470 line turned into tough resistance. This was eventually broken, and the pair closed just above 1.5520, at 1.5536 – Another week of retreat for the Pound.
GBP/USD ranges between 1.5520, which served as tough resistance in April and as support line in February, to 1.5720, which supported the Pound back in 2009. It’s less strong than in previous weeks.
Looking up, 1.5833, which provided support when the year began and later worked as resistance, is the next line. Higher, the psychological round number of 1.60 proved to be a tough barrier in recent weeks and is a strong resistance line.
Higher, 1.6080 is the next minor resistance line, after working as support in January. It’s followed by 1.6270, but that’s quite far at the moment.
Looking down below 1.5520, the next line of support is quite close – 1.5470 – it capped the pair just this week. 1.5350 served as pivotal line in March and April and this week’s attempt to break below it makes it strong again.
Below, 1.5230 was a stubborn resistance line in July and is now a major support line. Lower, 1.5120 will provide further support.
I remain bearish on the Pound.
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro/Dollar Forecast.
- For the Australian dollar (Aussie), check out the AUD/USD forecast.
- For the New Zealand dollar (kiwi), read the NZD/USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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