GBP/USD Forecast Feb. 20-24

GBP/USD posted moderate losses last week, closing just above the 1.24 line. This week’s key event is Second Estimate GDP. Here is an outlook for the highlights of this week and an updated technical analysis for GBP/USD.  

It was a positive week in the US, as retail sales and CPI beat expectations and Fed Chair Yellen sounded upbeat about the US economy. In the UK, CPI rose to 1.8%, shy of the forecast of 1.9%. Employment data was mixed, as unemployment rolls plunged while wages dipped lower.

Updates:

GBP/USD graph with support and resistance lines on it. Click to enlarge:

1. Rightmove HPI: Monday, 00:01. This indicator provides a snapshot of the level of activity in the housing sector. The indicator rebounded in January after two straight declines, posting a gain of 0.4%.
2. CBI Industrial Order Expectations: Monday, 11:00. The indicator continues to point upwards, and improved to 5 points in January, beating the estimate of 2 points. The markets are forecasting a gain of 5 points in the February report.
3. Public Sector Net Borrowing: Tuesday, 9:30. The UK’s budget deficit narrowed to GBP 6.4 billion in December, better than the estimate of GBP 6.7 billion. The markets are expecting a large surplus in the January report, with an estimate of -14.4 billion.
4. Second Estimate GDP: Wednesday, 9:30. GDP reports should be treated as market-movers, and an unexpected reading could have a significant impact on the movement of GBP/USD. Preliminary GDP posted a gain of 0.6% in Q4, edging above the estimate of 0.5%. The forecast for Second Estimate GDP stands at 0.5%.
5. Preliminary Business Investment: Wednesday, 9:30. The indicator continues to point upward and posted a gain of 0.9% in the third quarter. This easily beat the estimate of -0.2%. The markets are expecting a weak reading of 0.0% in Q4.
6. 10-y Bond Auction: Thursday, Tentative. In the January auction, the yield on 10-year bonds improved to 1.45%, its highest level since May 2016.
7. CBI Realized Sales: Thursday, 11:00. The indicator moved higher in Q4, but plunged in January with a reading of -8 points. This was much worse than the estimate of +28 points. The markets are forecasting better news for January, with an estimate of +5 points.
8. BBA Mortgage Approvals: Friday, 9:30. The indicator was up significantly in December, climbing to 43.2 thousand. This beat the forecast of 41.1 thousand. The estimate for January stands at 41.9 thousand.