GBP/USD fell by 1.zero% final week, wiping out the good points of the earlier week. There are 7 occasions subsequent week, with buyers centered on PMI studies. Right here is an outlook for the highlights of the upcoming week and an up to date technical evaluation for GBP/USD.
The Brexit saga took a serious twist final week, as Prime Minister Boris Johnson shocked lawmakers and the nation by suspending parliament. The transfer, which takes impact subsequent week, implies that parliament could have simply three weeks to cross laws with regard to Brexit previous to the withdrawal date on October 30. The suspension drew outrage throughout the nation, and has elevated the chance of a normal election within the close to future. On the identical time, the Brexit negotiations are at a standstill, and there’s a sturdy chance that the U.Okay. may go away with out an settlement in place. Such a state of affairs may ship the pound sharply decrease.
Within the U.S., the spotlight of the week was second-estimate GDP for Q2, which got here in at 2.zero%, matching the estimate. This was a slight downward revision from preliminary estimate, which got here in at 2.1%. It’s evident that second-quarter progress can be considerably weaker than Q1, and additional fee cuts could possibly be within the works within the the rest of 2019. Sturdy items orders improved to 2.1%, up from 2.zero% a month earlier. Nevertheless, core sturdy items orders declined by zero.four%, the primary decline in six months. The week wrapped up with UoM shopper confidence, which dropped sharply to 89.eight in July, down from 98.four in June. This marked the primary time that the important thing confidence indicator has dropped beneath the 90-level since October 2014.
GBP/USD each day graph with resistance and assist traces on it. Click on to enlarge:
Manufacturing PMI: Monday, eight:30. The British manufacturing sector stays weak, and the PMI has pointed to contraction for 3 straight months. The index got here in at 48.zero in July and no change is anticipated within the August launch.
BRC Retail Gross sales Monitor: Monday, 23:01. This shopper spending indicator posted a small acquire of zero.1% in July, after two straight declines. One other acquire of zero.1% is anticipated in August.
Development PMI: Tuesday, eight:30. The development business is in a state of contraction, with the PMI beneath the 50-level in 5 of the previous six months. This case is anticipated to proceed, with a forecast of 46.7.
Companies PMI: Wednesday, eight:30. The companies sector can be limping, with latest readings simply above the 50-level, which implies stagnation. In July, the PMI got here in at 51.four, and the index is projected to sluggish to 51.zero in August.
Halifax HPI: Friday, 7:30. The Halifax Financial institution of Scotland pointed to a lower up to now two readings. The markets expect an enchancment in August, with an estimate of zero.5%.
Shopper Inflation Expectations: Friday, eight:30. The Financial institution of England’s survey of two,000 shoppers has been regular, ticking decrease to three.1% in Q1, after displaying a acquire of three.2% within the earlier two quarters. No vital change is anticipated in Q2.
GBP/USD Technical evaluation
Technical traces from high to backside:
We begin with resistance at 1.2535. This line has held since mid-July. That is adopted by 1.2420.
1.2330 (talked about final week) has held in resistance for the reason that finish of July.
The spherical variety of 1.22 switched to resistance in mid-week following sharp losses by GBP/USD.
1.2080 is the primary assist degree.
The spherical variety of 1.20 follows.
1.1943 is subsequent.
1.1904 was the low level in October 2016.
The spherical line of 1.1800 is the ultimate line for now.
I’m bearish on GBP/USD
The suspension of parliament despatched shock waves throughout the U.Okay, however in reality the Brexit woes run a lot deeper, and it’s troublesome to see how the EU and the Johnson authorities will overcome their variations and attain a withdrawal deal. The uncertainty surrounding Brexit may imply additional headwinds for the British pound.
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