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The pound  rocketed higher, gaining  350 points  against the US dollar. GBP/USD closed at 1.5557. This week’s major events include  Manufacturing Production and Claimant Count Change.  Here is an outlook of the events and an updated technical analysis for GBP/USD.

British  economic data  looked good last week, as all three   PMIs beat their estimates, and all were above the 50-point level.  The pound got an added boost from weak US employment numbers late last week, which sent the dollar broadly lower.

Updates:

GBP/USD graph with support and resistance lines on it. Click to enlarge:    GBP USD Forecast June 10-14

  1. RICS House Price Balance: Monday, 23:01. The housing inflation indicator has been very unsteady, resulting in market estimates which have often been off the mark. The May release showed some improvement and rose to 1%, and the markets are expecting a gain of 2% in the upcoming release.
  2. Manufacturing Production: Tuesday, 8:30. This key indicator looked sharp in May, jumping 1.1%, well above the estimate of 0.4%. The markets are braced for a weak June release, with an estimate of 0.0%. Will the indicator again surprise the markets with a strong reading?
  3. 10-year Bond Auction: Tuesday, Tentative. The yield on British 10-year bonds has been fairly steady, and is unlikely to have much impact on the movement of GDP/USD. The average yield for the previous release was 1.73%.
  4. NIESR GDP Estimate: Tuesday, 14:00. This indicator is released each month, enabling analysts to better track GDP, which is released on a quarterly basis. The indicator rose 0.8% in the May reading, its best release since October 2012. The markets will be hoping for another strong release this time around.
  5. Claimant Count Change and Unemployment Rate: Wednesday, 8:30. Claimant Count Change has been pointing to an improving employment picture, as most readings this year have  fallen below the estimate. The key indicator pointed to a decline of 7.3 thousand last month, easily beating the estimate of -3.1 thousand. The June estimate stands at -6.8 thousand. The Unemployment Rate has been very steady, and no change is anticipated from the current rate of 7.8%.
  6. BOE Executive Director Paul Fisher Speaks: Fisher will be addressing an economic  conference in London. Analysts will be looking for clues regarding the BOE’s future monetary policy.
  7. BOE Quarterly Bulletin: Wednesday, 23:01. This report includes commentary on the BOE’s monetary policy and developments affecting the UK economy. A report which is more hawkish than expected is bullish for the pound.
  8. BOE Deputy Governor Paul Tucker Speaks: Thursday, 12:15. Tucker is scheduled to address a conference in Helsinki. Analysts will be looking for hints about the BOE’s future monetary policy. This could undergo a change with a change of leadership at the helm of the BOE on July 1, as former BOC governor Mark Carney takes over.
  9. CB Leading Index: Friday, 9:00. The index is based on 7 economic indicators, but is a third-tier release since most of the data has already been released. The index has been very steady, posting a gain of 0.4% for the past three readings.   As well, the index has not posted a decline all year, and this is expected to continue in the June release.
  10. External BOE MPC Member Ian McCafferty Speaks: Friday, 9:50.  McCafferty will speak to the Wall Street Journal in London, and analysts will be carefully combing through his remarks. If he comes across more hawkish than expected, we could see a positive reaction from the pound.

 

Live chart of GBP/USD:     [do action=”tradingviews” pair=”GBPUSD” interval=”60″/]

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5207. The pair  dropped below the 1.52 line, to 1.5196. It was all uphill from there, as GBP/USD flew upwards, reaching a high of 1.5684, briefly pushing past strong resistance at 1.5648 (discussed last week). The pair closed the week at 1.5557.

Technical lines from top to bottom:

We  begin with strong resistance at 1.6081. This is followed by the round number of 1.60, which has held firm since January. Below is 1.5894, which marked a high point in January, as GBP/USD  began a sharp downward spiral which saw it fall below the 1.50 level.

1.5804 continues to provide strong resistance. This line has held firm since February. This is followed by 1.5648. This line was breached as the pair shot higher, but, remained intact at the end of the week.

GBP/USD  is receiving  support at  1.5550. This is a weak line, and could see activity early next week.  1.5484 has reverted to a support role after  the pair’s sharp gains last week.

Next, 1.5416, which was providing resistance,  fell as the pair  pushed upwards  late in the week. It too  has reverted to a support role.   Below, 1.5258 has strengthened as the pair trades at higher levels.

This is followed by 1.5189, which saw action at the end of last month, and has provided support since then. The next support level is at 1.5061. The final line of support for now is at  1.5010, protecting the all important 1.50 level.

I  am  bearish  on GBP/USD.

The pound took advantage of some strong British PMIs and weak US numbers, but this could be a temporary move. The UK economy has not inspired confidence in the markets, and increasing talk of the US Federal Reserve winding up QE is bullish for the US dollar.

Further reading: