Home GBP/USD Outlook March 11-15

The British pound lost about a cent over the week, dipping below  the 1.50 line. The pair closed at 1.4922. This week’s major event is Manufacturing Production. Here is an outlook of the events and an updated technical analysis for GBP/USD.

The pound’s troubles continue, as  GBP/USD  dipped below the all-important 1.50 level.  US employment numbers looked very sharp last week,  which helped the dollar post gains against  the shaky British currency.

Updates: The UK has started the week with mostly disappointing data. RICS House Price Balance declined 6%, way off the estimate of -1%. Manufacturing Production, a key release,  posted a sharp drop of  1.5%. The estimate stood at 0.0%. It was the indicator’s steepest decline since August 2012. There was some good news from the Trade Deficit, which narrowed nicely  from 8.2 billion pounds to  8.2 billion. The markets had anticipated a reading of -8.8 billion. The NIESR GDP Estimate, a monthly indicator, will   be released later on Tuesday. The pound is showing volatility, and has edged higher after earlier losses on Tuesday. GBP/USD was trading at 1.4894. NIESR GDP Estimate posted a decline of 0.1%. The BOE released its Quarterly Bulletin. The BOE noted an improvement in market sentiment, thanks to monetary measures taken by the US Federal Reserve and ECB in Q4 of 2012. The pound has climbed higher, as GBP/USD  was  trading at 1.4976.

 

GBP/USD graph with support and resistance lines on it. Click to enlarge:    GBP USD Forecast Mar 11-15

 

  1. RICS House Price Balance: Tuesday, 00:01. This housing inflation index continues to point to a housing sector in trouble, as the index last posted a reading in positive territory in 2010. The markets well be hoping for some improvement in the March release.
  2. Manufacturing Production: Tuesday, 9:30. Manufacturing Production, this week’s key release, looked sharp in February, as it jumped 1.6%. However, the markets are bracing for a downturn in the upcoming release, with an estimate of a paltry 0.1% gain. Will the indicator surprise the markets and beat the forecast?
  3. Trade Balance: Tuesday, 9:30. The UK’s Trade Deficit has been narrowing in recent readings, and declined to 8.9 billion pounds in the previous release. The markets will be hoping that the deficit continues to fall in the March release.
  4. NIESR GDP Estimate: Tuesday, 3:00. GDP is one of the most important economic releases and a market mover for the pound, but it is only published  once a  quarter. The NIESR GDP Estimate is released every month, and help analysts track and predict GDP. The indicator has not looked sharp in recent readings, and came in at a flat 0.0% in February. The markets will be hoping for a March reading in positive territory.
  5.  30-year Bond Auction: Wednesday, Tentative. The 30-year bond auction is a third-tier indicator, but can grab the attention of the markets if it deviates substantially from the previous release. The previous auction, which took place back in September, posted an average yield of 2.95%.
  6. CB Leading Index: Friday, 10:00. This index is comprised of seven leading indicators. The index has been fairly quiet lately, and posted a modest gain of 0.1% in February. The markets will be hoping for an improvement in the March reading.
  7. 10-year Bond Auction: Friday, Tentative. The last 10-year   bond auction took place in February. The average yield  at that time  was 2.15%, slightly higher than the previous auction. The markets are not expecting any dramatic changes in the upcoming release.

 

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5032. The pair touched a high of 1.5199 ,but  was  unable to sustain this upward momentum. The pair  dropped to a low  of 1.4884, breaking past support at 1.4896 (discussed last week).  GBP/USD closed the week at 1.4992.

Technical lines from top to bottom:

With the pound losing more ground last week, we begin at lower levels. There is resistance at 1.5567. This   line last saw activity in mid-February. This is followed by resistance at 1.5484.  Next, there is resistance at 1.5406. This line had  served in a support role since July 2012, before reverting to resistance line in mid-February. Next, there is resistance is at 1.5282. This is followed by 1.5189, which was briefly breached as the pound showed  flexed some muscle early in  the week. Below, there is resistance at 1.5061. This is followed by 1.5010, which had a busy week and could see further action.

GBP/USD is receiving support at 1.4896, just below the round number of 1.49. The pair broke through this line at the end of the week, but it remains intact  as the pair rebounded slightly. We next encounter support at 1.4765, which has remained intact since June 2010. This is followed by support at 1.4665. Next is support at 1.4540. The final support line for now is at 1.4374, which has held firm since June 2010.

I remain bearish on GBP/USD.

The pound’s misery continues as the British currency has shed over ten cents since the beginning of February. The UK economy continues to sputter,  in contrast to the  US, which  has posted some solid numbers of late. This has resulted in the dollar putting more pressure on the pound.    The pound has again dipped below the 1.50 line, and we could see the pair continue to trade in 1.49 territory.

Further reading:

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.