GBP/USD defied gravity and worrying data to stay afloat, taking advantage of the weakness of the US dollar. The upcoming week features the inflation report and retail sales numbers among other events. Will cable remain stable? Here are the key events and an updated technical analysis for GBP/USD.
The UK trade balance deficit expanded, various measures of consumption are slowing and the BOE reports a worsening debt situation. Nevertheless, the weakness of the dollar, mostly exposed through the report about China slowing or halting the buying of US Treasuries, helped stabilize GBP/USD. Can this continue or will Brexit send the pound lower?
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
BP/USD Technical Analysis
Pound/dollar was pressured to the downside at some points during the week but the 1.3460 support level mentioned last week proved itself quite nicely.
Technical lines from top to bottom:
The recent cycle high of 1.3620 serves as strong resistance. 1.3550 was the November peak.
1.3460 capped the pair in mid-December and serves as resistance. The round level of 1.33 is a key level of support, working as such around the same period of time.
1.3225 was the high point of September. It is followed by 1.3180, which capped the pair in July.
1.3080 worked as support in mid-October and also was weak support during November. 1.3030 is the bottom of the range, cushioning cable in October and also in early November.
I remain bearish on GBP/USD
While the pound is showing a lot of strength, it is hard to see this continuing. The pound could eventually succumb to the pressure: internal and extenral political issures, inflation that is biting, a reluctant central bank and an economic slowdown.
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