GBP/USD posted modest gains last week. The pair climbed close to the 1.67 line last week, but was unable to consolidate at these levels and closed the week at 1.6477. This week’s highlight is Preliminary GDP. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.
US Unemployment Claims enjoyed another good week, beating the estimate. The pound shot up in mid-week as the British Unemployment Rate dropped to 7.1%, fuelling speculation about an interest rate hike.
[do action=”autoupdate” tag=”GBPUSDUpdate”/]GBP/USD graph with support and resistance lines on it. Click to enlarge: 
- Preliminary GDP: Tuesday, 9:30. Of the three versions of GDP, Preliminary GDP is released the earliest and has the greatest impact. The indicator is released each quarter, magnifying the importance of each reading. Preliminary GDP continues to move higher and rose to 0.8% in Q3, matching the estimate. The markets are expecting the same gain in Q4.
- Nationwide HPI: Wednesday, 7:00. This housing inflation indicator is an important gauge of activity in the UK housing industry. The index jumped 1.4% in November, easily beating the estimate of 0.8%. The markets are expecting a weaker gain for December, with an estimate of 0.7%.
- BOE Governor Mark Carney Speaks: Wednesday, 12:15. Carney has been busy pouring cold water on speculation about a rate hike, as the UK economy improves and unemployment has dropped close to 7.0%. Carney will address an event in Edinburgh and analysts will be looking for clues as to the BOE’s future monetary policy.
- Net Lending To Individuals: Thursday, 9:30. This indicator is linked with consumer confidence and spending, as increased debts levels signifies that consumers are more comfortable taking upon debt in order to make purchases. The indicator came in at 1.5 billion pounds in December, a four-month low. This was well-short of the estimate of 2.0 billion. The markets are expecting an improvement in December, with the estimate standing at 1.9 billion.
- GfK Consumer Confidence: Friday, 12:05. With the British economy continuing to improve, it’s perhaps surprising that the indicator has been losing ground in recent releases, pointing to a lower consumer confidence. The previous release came in at -13 points, missing the estimate of -11 points. The December reading is expected to improve, with an estimate of -10 points.
* All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.6417 and quickly touched a low of 1.6395. The pair then climbed sharply, hitting a high of 1.6668. GBP/USD then retracted, closing at 1.6477, as support at 1.6475 (discussed last week) remained intact.
Live chart of GBP/USD: [do action=”tradingviews” pair=”GBPUSD” interval=”60″/]
Technical lines from top to bottom
We begin with resistance at 1.6990, which is protecting the key 1.70 level. This line has remained intact since October 2008.
Next, there is resistance at 1.6705, which has held firm since May 2011. This line remained intact as the pound posted sharp gains during the week. This is followed by the round number of 1.6600.
1.6475 continues to be active and was breached again week. The line is providing support just below where the pair closed the week, and could be tested early this week.
This is followed by 1.6343, which continues to provide support line. It has some breathing room as the pair trades at higher levels.
1.6247 is providing the pair with strong support. This was a key resistance line in October and November 2012.
1.6125 is the next support level. This line has held steady since late November.
The round number of 1.60, a key psychological barrier, is providing the pair with strong support.
The final support level for now is 1.5893, which last saw action in November.
I am neutral on GBP/USD.
GBP/USD posted modest gains last week, but the pound is now longer running roughshod over the US dollar. Additional QE tapering is expected this week, and such a move would likely bolster confidence in the US economy and provide a boost to the dollar. The BOE continues to reiterate that it has no plans to raise interest rates, as it does not want to see the pound gain ground too quickly.
Further reading:
- 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.
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