The British pound plunged last week, as GBP/USD lost over 300 points. The pair closed at 1.4614. This week’s highlights are CPI and Claimant Count Change. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.
The pound took a dive following weak UK manufacturing numbers, election uncertainties, and hawkish sentiment in the FOMC minutes. In the US, employment job numbers rebounded last week. JOLTS Job Openings improved and the 4-week jobless claims was the lowest since 2000.
Updates:
- Apr 17, 17:00: Sterling’s Election Stumble: How To Play It? – BNPP: The upcoming parliamentary elections in the UK on May 7th have already sent shivers and the pound could not sustain…
- Apr 17, 16:00: US Consumer Confidence beats at 95.9: US consumer confidence came out better than expected at 95.9 points in the preliminary read for April, already in Q2,…
- Apr 17, 14:30: US core inflation ticks up to 1.8% – USD is on fire: Headline inflation is down to -0.1% – deflation territory, but it has been there before, due to oil prices. Core…
- Apr 17, 12:45: This week in the markets: The dollar is the biggest: The story for most of this week was one of the dollar’s weakness. After the soft jobs data last week,…
- Apr 17, 10:32: UK jobs data misses by a bit but GBP/USD eventually: The UK saw 20.7K less people claiming for jobs, slightly worse than expected but nothing dramatic. The unemployment rate dropped…
- Apr 17, 10:20: Markets await Inflation figures: The euro has held up very strongly in the face of mounting concerns that Greece will soon have to leave…
- Apr 17, 9:40: EURUSD, GBPUSD, USDJPY Pivot Points, TA – Apr. 17 2015: EURUSD Daily Pivots R3 1.1036 R2 1.0927 R1 1.0843 Pivot 1.0733 S1 1.065 S2 1.0539 S3 1.0457  EURUSD made…
- Apr 17, 8:03: EURGBP – Consolidates With Upside Bias: EURGBP- With the cross halting its weakness and consolidating, it looks to recover higher. On the downside, support lies at…
- Apr 16, 14:30: US housing and jobs data falls short – USD extends falls: The US dollar bulls are hit once again by weak data: jobless claims rose to 294K, building permits came out…
- Apr 16, 6:49: GBPJPY: Halts Weakness, Eyes Recovery: GBPJPY: With GBPJPY closing higher on Tuesday on a rejection candle off its key support zone at 175.30/49, it faces…
- Apr 15, 9:48: All eyes on the ECB meeting April 2015: Chinese GDP data overnight has fallen to its lowest level for six years and whilst it is in line with…
- Apr 15, 9:46: EURUSD, GBPUSD, USDJPY Pivot Points, TA – Apr. 15 2015: EURUSD Daily Pivots R3 1.0905 R2 1.0806 R1 1.0729 Pivot 1.0630 S1 1.0553 S2 1.0454 S3 1.0377  EURUSD broke…
- Apr 14, 15:15: Pocketbook Panic: Currency markets traded within a narrow range overnight, with participants waiting for the US data drop to determine the direction…
- Apr 14, 14:30: US retail sales rise 0.9% – below expectations – USD: It’s almost OK in US springtime, but not good enough. The volume of retail sales rose by 0.9% in March…
- Apr 14, 12:03: GBP/USD in 3-wave pattern; USD/CAD could fall before rising: The USD is in a bullish mode since last week, but on the short-term charts we noticed that most of…
- Apr 14, 11:36: EURUSD, GBPUSD, USDJPY TA, Pivot Points – Apr. 14 2015: EURUSD Daily Pivots R3 1.0715 R2 1.0666 R1 1.0616 Pivot 1.0567 S1 1.0517 S2 1.0468 S3 1.0418  EURUSD was…
- Apr 14, 11:10: Greece nears default April 14 2015: After a quiet start to the week where the dollar just paused for breath, the single currency is coming under…
- Apr 14, 10:30: UK inflation remains at 0%, other figures disappoint –: No surprise at the headline number: Britain is still not in deflation. Other numbers are less impressive: core CPI dropped from…
- Apr 14, 9:38: GBPUSD Holds Above Key Supports, Eyes Further Upside: GBPUSD: Having held off the 1.4633/00 zone, we look for GBPUSD to strengthen further above that level in the days…
- Apr 13, 15:41: Double Top Confirmed as EURGBP Slides Lower: As a follow up to yesterday’s commentary, EURGBP has now closed below the neckline at .7225 on a 4 hour…
- Apr 13, 12:13: USDown or greenback comeback? And more – Market Movers: What’s going on in America? Where is the dollar headed? That is the focus of our latest episode as the Easter…
- Apr 13, 11:00: Markets await UK unemployment data: The economic calendar is very quiet today which gives us a chance to reflect on a week gone by that…
- Apr 13, 9:14: EURUSD, GBPUSD, USDJPY Pivot Points, TA – April 13 2015: EURUSD Daily Pivots R3 1.0779 R2 1.0731 R1 1.0663 Pivot 1.0615 S1 1.0547 S2 1.0499 S3 1.04313  EURUSD continues…
- Apr 13, 9:04: EURGBP Finds Support as Double Top Looms: After losing more than 800 pips to start the year, EURGBP found relief on March 11th as the pair rallied…
GBP/USD graph with support and resistance lines on it. Click to enlarge:
- BRC Retail Sales Monitor: Tuesday, 00:01. This indicator looks at the change in retail sales value in BRC shops. The index has posted two straight gains of 0.2%, pointing to weak spending by the UK consumer. We’ll get a look at official retail sales numbers next week.
- CPI: Tuesday, 9:30. This is the first key event of the week. Inflation levels continue to head lower in the UK, as CPI slipped to 0.0% in February, very close to the forecast. No change is expected in the March report.
- PPI Input: Tuesday, 9:30. This manufacturing inflation indicator has struggled, as the February gain of 0.2% broke a long string of declines. This reading was well off the forecast of 1.6%. The markets are expecting a downturn in the March release, with an estimate of -0.5%.
- RPI: Tuesday, 9:30. This consumer inflation indicator includes housing prices, which are excluded from the CPI release. Like CPI, the indicator has been on a sustained slide, and softened to 1.0% in February, within expectations. The markets are expecting another 1.0% gain in the March report.
- CB Leading Index: Wednesday, 2:30. This minor event is based on 7 economic indicators. The indicator posted a small gain of 0.2%in January. Will we see more of the same in the February release?
- RICS House Balance: Thursday, 00:01. This indicator provides a snapshot of a activity in the UK housing sector. In February, the indicator improved to 14%, easily beating the forecast of 6%. Little change is expected in the March report, with a estimate of 15%.
- Average Earnings Index: Friday, 9:30. This is a key indicator of consumer inflation. The index dipped to 1.8% in January, short of the forecast of 2.2%. The estimate for the February release stands at 1.8%.
- Claimant Count Change: Friday, 9:30. Claimant Change is one of the most important economic indicators, and an unexpected reading can have an immediate impact on the direction of GBP/USD. The indicator continues to shine, as UK unemployment rolls keep getting smaller. The February reading came in at -31.0 thousand, close to the forecast. Another strong reading is expected in the March report, with a estimate of -29.0 thousand.
* All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.4920 and touched a high of 1.4981, as resistance held firm at 1.5008 (discussed last week). The pair then sharply reversed directions and slid to a low of 1.4587. The pair closed the week at 1.4614.
Live chart of GBP/USD:
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Technical lines from top to bottom
With the pound posting huge drops, we begin at lower levels:
1.5114 has been a resistance line since mid-March.
1.5008 held firm for a third straight week, as the pair pushed higher early in the week before dropping sharply.
1.4813 was easily breached and has switched to a resistance role.  It marked the start of a pound rally in July 2013 that saw GBP/USD climb above 1.61.
1.4621 has also reverted to a support role following strong losses by the pound. This line was an important cap in August 2001.
1.4521 is providing support. This line has remained intact since June 2010.
1.4346Â is the next support level.
The final support line for now is 1.4227.
I am bearish on GBP/USD.
The pound took a beating last week, even without stellar US data. Will the greenback’s rally continue? UK inflation is in a nosedive, and this could hurt the pound. US employment data rebounded nicely last week following the dismal NFP report and market sentiment on the US economy remains strong.
In this week’s podcast, we discuss: USDown or greenback comeback? And also touch other topics:
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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 kiwi, see the NZDUSD forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- USD/CAD (loonie), check out the Canadian dollar.
