GBP/USD leveled off from its recent rally, and was unchanged at week’s end. The pair closed the week at 1.6169. The markets will be closed on Dec. 25th and 26th, and there are only two releases next week. Here is an outlook of the events and an updated technical analysis for GBP/USD.
The pound managed to hold its own against the dollar despite some weak fundamentals last week. Key releases such as Retail Sales and Public Sector Net Borrowing disappointed, although Current Account beat the estimate.
Updates: The markets are closed on Wednesday for a holiday. BBA Mortgages will be released on Thursday. The housing indicator has been improving recently, and the markets are expecting the upward trend to continue in the December reading. GBP/USD has edged higher, and the pair was trading at 1.6140. BBA Mortgage Approvals showed little change, coming in at 33.6 thousand. This fell below the estimate of 34.6K. Nationwide HPI is expected to be released on Friday or the weekend. The estimate stands at a 0.1% gain. GBP/USD has lost ground and was trading at 1.6158.
- BBA Mortgage Approvals: Thursday, 9:30. The indicator has been steadily moving upward since July, and the markets are expecting another improvement in the December release, with an estimate of 34.6K. Will the indicator meet or beat this forecast?
- Nationwide HPI: Thursday, 27th -30th. This housing inflation indicator fell sharply last month, dropping to a disappointing 0.0%. The markets are anticipating a slight improvement in the upcoming reading, with an estimate of 0.1%.
*All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.6173. The pair touched a low of 1.6152, but then climbed up to 1.6307, as it broke through resistance at 1.6247 (discussed last week). GBP/USD then retracted at the end of the week, closing at 1.6169.
Technical lines from top to bottom:
We start with resistance at 1.6747, which has not been tested since May. Next, there is resistance at the round number of 1.66. Below, is the line of 1.6475. This line has held firm since August 2011. This is followed by resistance at 1.6343. This line was last breached when the pound dropped sharply in August 2011. Next, the pair briefly broke through resistance at 1.6247, on its sharp but short-lived push which reached above 1.63.
GBP/USD continues to receive support at 1.6122. This line was quiet last week, but could see some activity if the pound shows any weakness. Next is 1.6060. Below, there is support at 1.5992. This is followed by 1.5930,which has provided firm support since late November. Next, there is strong support at 1.5850. This line has been solid since mid-November, when the pound began its rally against the greenback. This is followed by 1.5750, a strong support line which has not been tested since August. The final support line for now is at 1.5648.
I am neutral on GBP/USD.
The pound has posted an impressive rally since mid-November, gaining around three cents against the US dollar. However, as we approach the end of 2012, the markets are now focused on the looming fiscal cliff crisis in the US. There is less optimism that an agreement will be reached prior to the end of the year, and the White House stated that is prepared to “fall over the cliff” until next year. A resolution to fiscal crisis would be dollar negative, but until that time, we can expect some volatility from GBP/USD.
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.