GBP/USD rocked and rolled on the government’s precarious position and on not-so-great data. What’s next? The upcoming week features few economic indicators, leaving more room for Brexit to have its say. Here are the key events and an updated technical analysis for GBP/USD.
UK inflation came out below expectations at 2.4%. Retail sales also disappointed. Yet the instability of the British government that hardly survived votes in parliament weighed more than anything else. In the US, inflation rose as expected and Fed Chair Powell remained upbeat on the economy, boosting the US Dollar. However, late in the week, President Trump surprised by criticizing the Fed’s hikes and calling for a weaker US Dollar. That reversed the greenback’s gains.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
* All times are GMT
GBP/USD Technical analysis
Pound/dollar dropped sharply, falling off the round number of 1.30 mentioned last week before recovering.
Technical lines from top to bottom:
1.3615 capped the pair in late 2017. 1.3470 was a swing high in early June.
The round number of 1.34 could provide further support. 1.3365 was a swing high in mid-July. Further down, 1.3315 was a swing high in late June.
1.3250 was a swing low in early June. Even lower, 1.3205 was the low point in late May. 1.3100 was a swing low in mid-June and 1.3050 is the latest 2018 low. The round number of 1.3000 awaits below. Even lower, 1.2955 is the low point seen in mid-July.
I am bearish on GBP/USD
The British government’s stability did not last for too long. In addition, there are doubts about the rate hike in August. Even if the dollar is pressured by Trump, the pound has bigger troubles.
Our latest podcast is titled Festive Fed, Dovish Draghi, and a global trade war
Follow us on Sticher or iTunes
- EUR/USD forecast – for everything related to the euro.
- USD/JPY forecast – projections for dollar/yen
- AUD/USD forecast – predictions for the Aussie dollar.
- USD/CAD forecast – Canadian dollar analysis
- Forex weekly forecast – Outlook for the major events of the week.