GBP/USD has a turbulent week with the transition deal, mixed data and the BOE nearing a rate hike. Can the pair continue higher? Final GDP and the Current Account stand out. Here are the key events and an updated technical analysis for GBP/USD.
The EU and the UK did not wait for the Summit on Thursday to announce that a transition deal for Brexit has been reached. The British government climbed down on several demands and the question of the Irish border was kicked down the road. Nevertheless, this undoubtedly cheered the pound. Data was mixed with inflation sliding to 2.7% y/y while wages increased to 2.6%. Retail sales shined with a bounce of 0.8% and two members of the BOE surprised by voting for a rate hike already now. The chances of an increase in the interest rate in May have increased. In the US, the Fed raised rates as expected but did not change the outlook for 2018, leaving a total of three hikes. Trump’s tariffs on China caused worries in markets and the US dollar dropped.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
GBP/USD Technical Analysis
Pound/dollar was initially stuck under 1.40 but then made a decisive break to the upside, reaching 1.4220 at the peak before closing around 1.4135.
Technical lines from top to bottom:
1.4345 is the January 2018 swing high that is worth watching. 1.4280 was a top line in early February and it comes next.
1.4220 was a swing high in late March 2018. 1.4150 capped the pair in mid-February.
1.4070 is next, after serving as a swing high in late February. It is followed by the round level of 1.40, which is eyed by many.
1.3935 capped the pair early in March and remains a battle line. 1.3790 was a swing low in mid-March.
1.3765 was the low point in early February. 1.3710 was a low point in early March.
I am neutral on GBP/USD
The pound got its boost from the can-kicking exercise in Brussels and this may see a reversal, but also the US has its troubles with the dovish hike and the trade wars.
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