A revised version on the GDP and 5 other events will shake the Pound, now at lower ground. Here’s an outlook for the British events and an updated technical analysis for GBP/USD.
GBP/USD chart with support and resistance lines marked. Click to enlarge:
While the political uncertainty didn’t stay too long, the Pound’s situation is still dire. It’s fate cannot be detached from the fate of the Euro. Contagion also reached Britain. OK, let’s start:
- Adam Posen talks: Starts speaking on Monday at 17:30 GMT. External BOE MPC Member Adam Posen already moved the Pound several times in the past, and he’ll have a chance to do so in his speech early in the week. Any hints about future rate hikes or the situation of the economy are likely to impact trading.
- Revised GDP: Published on Tuesday at 8:30 GMT. Britain’s economy is still struggling. According to the initial release, Britain grew by only 0.2% in Q1. This was half of early expectations. The second release is expected to show a better picture – a growth rate of 0.3%. Any result will rock the Pound.
- BBA Mortgage Approvals: Published on Tuesday at 8:30 GMT, and overshadowed by the GDP release. The British Bankers Association covers two thirds of all British mortgages, and releases this housing figure quite early. After losing the highs of 46K, the figure fell under 34K. It’s now expected to recover and rise to 38.3K.
- CBI Realized Sales: Published on Thursday at 10:00 GMT. 160 retailers and wholesalers are surveyed for CBI’s important indicator. In the past three months, this number was positive, indicators higher sales volume. A small rise from 13 to 14 is predicted this time.
- GfK Consumer Confidence: Published on Thursday at 23:00 GMT (midnight UK). Consumers’ pessimism worsened last month, with an unexpected drop to -16 points. 2,000 consumers are expected to show a bit less pessimism this time, with a rise to -15 points.
- Nationwide HPI: Publication time unknown at the moment. Two straight months of rises have proved that the drop seen in January was a one time glitch. The UK’s second earliest house price report always rocks the markets. Another small rise of 0.5% is expected this time.
GBP/USD Technical Analysis
The British Pound reached fresh lows very early in the week, breaking the technical level of 1.44 and bottomed out only at 1.4230. It then recovered and closed at 1.4450.
The Pound’s range is now between 1.44, the previous major support line, and 1.45, which proved to be a new line of resistance. Note that some lines were added on last week’s outlook.
Looking up, the next line of resistance is at 1.4780, which held GBP/USD for several months. This is a strong line. Above, 1.4975 is a minor resistance line, followed by 1.5130, which worked as support just a few weeks ago. It’s followed by 1.5350, which worked as both support and resistance, and by 1.5520 which wasn’t broken in three months.
Looking down, the fresh 2010 low of 1.4230 is the next immediate support. Stronger support is found at 1.4130, which was a support line in April 2009. Further below, 1.38 also stopped the pair at the beginning of 2009, and is the next line of support. The ultimate support line is 1.35, which is the lowest level seen in over 20 years.
I remain bearish on the Pound.
A serious revision in GDP is necessary for the Pound to recover from the recent blows, but the European troubles will probably continue bringing it down.
- For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For the Australian dollar, read the AUD/USD forecast.
- For USD/CAD, check out the Canadian dollar forecast.
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