Weekly Analysis: The entire last week price action was incredibly choppy and no advances were made by either side. Overall the pair moved sideways and all directional moves were quickly reversed.
Technical Outlook
The pair was trapped between 1.1450 resistance and 1.1335 support for more than a week and this increases the probability of a breakout in the near future, probably this week. The latest impulse is bullish but from a longer term perspective the pair is ranging, without a clear trend. The oscillators are overbought and 1.1450 is proving to be a strong barrier so we slightly favor a bearish breakout but for that to happen, the first hurdle is the bullish trend line seen in on the chart above. If this line and 1.1335 are broken, we expect a bearish week, with price moving closer to the 50 period Exponential Moving Average.
Fundamental Outlook
Monday the Fed will hold an unexpected Meeting under “Expedited Procedures”, with the main topic being Interest Rates. High volatility is very possible but the actual impact is not known, thus caution is recommended. Wednesday the U.S. Retail Sales are released, showing changes in the total value of purchases made by consumers at retail outlets. This kind of sales represents a major part of the entire consumer spending and usually a better than expected value is beneficial for the US Dollar.
Thursday we remain on the US Dollar side for the release of the U.S. Consumer Price Index, which is one of the main gauges of inflation and usually has a strong impact on the greenback, with higher numbers strengthening it. Eurozone’s Final CPI is also released Thursday but this is the least important version of the indicator and usually doesn’t have a tremendous impact; nonetheless, higher numbers can strengthen the Euro.
Friday’s main event is the release of the University of Michigan Consumer Sentiment, a survey that offers insights into the opinions of consumers regarding current and future economic conditions; higher numbers show that consumer spending is likely to increase in the future and usually generate greenback strength.
GBP/USD
The British economic data released throughout last week was rather mixed but the Pound weakened against the US Dollar, bouncing lower at the 50 days Exponential Moving Average and breaking out of a triangle chart pattern.
Technical Outlook
Although the bears managed to take price outside the triangle chart pattern, the important support at 1.4050 is hindering further advances to the downside. If this level is broken soon, we expect the pair to head into the previous low located at 1.3835 but if another bounce occurs at this area, probably the 50 period Exponential Moving Average is the next destination. The oscillators don’t offer a lot of hints about future direction and overall the balance of power is fragile.
Fundamental Outlook
Tuesday the United Kingdom will release the Consumer Price Index, which shows changes in inflation and also has a strong impact on the Pound under usual circumstances; since the current value is considered too low, an increase would be beneficial for the Pound.
The second and last notable event of the week is the Bank of England interest rate decision scheduled Thursday. No change is anticipated for a relatively long period but the announcement can create volatile movement on Pound related pairs. At the same time BoE will release a summary of the Monetary Policy meeting, showing the reasons that determined the rate decision and also a breakdown of the members’ votes on the rate. This cluster of events is likely to generate irregular movement, thus we recommend caution.
WEEKLY ANALYSIS: US DOLLAR TURNS UP THE HEAT. FULL SCALE REVERSAL IN THE MAKING?
EUR/USD
Weekly Analysis: Last week the bears made a strong statement by managing to break the bullish trend line seen on the chart below, after another bounce off of the key resistance at 1.1450, so the pair might be preparing for a deeper move south.
Technical Outlook
This week we expect a continuation of the move started last week but the 50 days Exponential Moving Average represents a strong barrier and also a point where the bulls could step in to try and take back control. Near this zone we have 1.1210 support, a fact which adds more strength to the zone but the Stochastic and Relative Strength Index are moving down after being overbought and this favors a continued move down. As you can see, the balance is not heavily shifted towards one side or the other but we slightly favor a move south towards 1.1100. To the upside the levels to watch remain 1.1335 and the key resistance at 1.1450.
Fundamental Outlook
The first important release of the week is the German ZEW Economic Sentiment, a survey of about 275 investors and analysts regarding the state of the German economy. The survey comes out Tuesday and the same day the U.S. Building Permits are released, offering a look into the health of the American construction sector.
Wednesday is a slow day but action picks up Thursday when the European Central Bank announces the interest rate and ECB President Mario Draghi holds a press conference that is known to be a market mover and a reason for increased volatility. Friday the ECOFIN and Eurogroup meetings start, attended by key personalities from the Euro area and the same day the European Flash Manufacturing PMI and Flash Services PMIs are released; these are leading indicators of economic health focused on the respective sectors and usually have a hefty impact on the currency, with higher numbers strengthening it.
GBP/USD
The pair broke out of the triangle pattern it was in but the bears failed to capitalize and the ranging period is still not over. We expect a real breakout this week but so far the pair is hesitating to pick a side.
Technical Outlook
Price lacks momentum and neither bulls nor bears are in control but the 50 days Exponential Moving Average as well as the previously broken trend line are in close vicinity and here we may get some clues about future movement. Price has already bounced lower once 1.4350 was touched but another bounce lower in the current area will show that price is indeed headed lower; of course, if this happens, 1.4050 will become the main level to break.
Fundamental Outlook
Bank of England Governor Mark Carney will testify Tuesday before the Lords Economic Affairs Committee, in London. The event should be treated with caution because the Pound is likely to show irregular movement at the time.
Wednesday the Claimant Count Change comes out, showing changes in the number of people who applied for unemployment related benefits during the previous month. A higher number shows that more people are unemployed and has a negative influence on the Pound, weakening it. The last important event of the week is the release of the British Retail Sales scheduled Thursday. Higher numbers for this indicator usually bring Pound strength but the impact is sometimes mild.
WEEKLY ANALYSIS: THE US DOLLAR BUCKLES UP FOR STRONG MOVES. IT’S FED RATE WEEK!
EUR/USD
Weekly Analysis: Last week ended on a bearish note, even if the beginning belonged to the bulls, who managed to take price briefly above 1.1335. The ECB kept rates unchanged and during the press conference, ECB President Draghi did not make any statements that can affect long term movement.
Technical Outlook
The pair remained below the broken bullish trend line and the move above 1.1335 was reversed; now we see increased bearish pressure as the 50 period Exponential Moving Average is threatened. This technical indicator combined with the horizontal support at 1.1210 creates a confluence zone that will be difficult to break by the bears, but on the other hand, a break would show that the balance of power is clearly favoring the short side. If this occurs, we expect to see a touch of 1.1100 next. For now, 1.1335 is the first resistance, followed by 1.1400.
Fundamental Outlook
The first event of the upcoming week is the release of the German IFO Business Climate, a survey of about 7,000 businesses that asks respondents to give their opinion regarding the state of the economy and business conditions. The release is scheduled Monday and is followed Tuesday by the U.S. Durable Goods Orders, an indicator that shows changes in the total value of orders for goods with a life expectancy of at least 3 years. The same day an American Consumer Confidence survey comes out and acts as a leading indicator of consumer spending.
Wednesday it’s the most important day of the week as the Fed will announce their decision on the interest rate; also a FOMC Statement will be released, outlining the reasons that determined the rate decision. Although no rate change is expected, this release has a strong impact most of the times so caution is recommended.
Thursday’s highlights are the release of the German Preliminary CPI, which is the main gauge of inflation and on the US Dollar side we have the Advance Gross Domestic Product; this is the first version of the GDP and tends to be the most important so we might see significant moves for the greenback. Friday’s highpoint is the release of the Eurozone CPI Flash Estimate which is a key gauge of inflation across the European Union.
GBP/USD
The Pound had a strong week against the US Dollar and took the pair above the 50 period Exponential Moving Average in a fast move; however, bullish movement slowed down for the end of the week.
Technical Outlook
The pair finished last week above 1.4350 and above the 50 period Exponential Moving Average and this makes the short term bias bullish. That being said, we expect a touch of 1.4500 resistance but keep in mind that overall the pair lacks a clear trend and direction changes often, so once (or if) 1.4500 is touched, we expect to see a move south. Probably by that time the two oscillators will both become overbought and this will add to the chances of a drop. If this is the case, the moving average will become the first lower target.
Fundamental Outlook
The week ahead is scarce in economic releases that can affect the Pound, with the most noteworthy being the Preliminary version of the British Gross Domestic Product scheduled for release Wednesday and the Net Lending to Individuals scheduled Friday. The former indicator is considered the most important gauge on an economy’s overall performance, while the latter shows changes in the value of loans issued to consumers. Higher numbers for these indicators usually bring Pound strength and the opposite is true for lower numbers. As always, throughout the week the pair’s movement will be directly influenced by the U.S. events mentioned earlier.
WEEKLY ANALYSIS: KEY RESISTANCE THREATENED, NFP WEEK AND A RECOVERING US DOLLAR
EUR/USD
Weekly Analysis: Last week the Fed decided to keep rates unchanged and the US Dollar weakened, allowing the pair to complete a perfect bounce at support. Resistance is still holding but momentum belongs to the bulls.
Technical Outlook
The bounce at 1.1210 support and the fact that price is still above the 50 days Exponential Moving Average shows that there is still underlying strength on the bullish side. However, 1.1450 has acted as strong resistance in the past and the pair ended last week right on this level so we may see a bearish bounce here. The oscillators offer mixed signals, with the Relative Strength Index approaching overbought and the Stochastic just exiting oversold, so probably the next direction will be decided by the way price behaves at the key level of 1.1450.
Fundamental Outlook
The week opens Monday with a speech of the ECB President Mario Draghi, titled “The future of financial markets: A changing view of Asia”. We don’t know how the markets will receive this event and what the impact will be but caution should be used nonetheless.
Tuesday is a slow day and Wednesday we get an early look into U.S. employment situation with the release of the ADP Non-Farm Employment Change, a report that shows changes in the number of employed people, excluding the farming sector and government.
Thursday German and French banks are closed in observance of Ascension Day so we don’t have any major releases, while Friday will probably be the most active day of the week as the U.S. Non-Farm Employment (Non-Farm Payrolls) report comes out, showing the change in the number of employed people during the last month, excluding the farming sector. This is widely considered the most important U.S. jobs data and the impact on the US Dollar is usually huge, with higher numbers strengthening it.
GBP/USD
The US Dollar weakened against all of its major counterparts last week and the Pound was no exception. Key resistance is currently being tested.
Technical Outlook
The level at 1.4650 is a major hurdle in front of rising prices and has acted as strong resistance in the past. A break would be a great victory for the bulls but the Stochastic and Relative Strength Index are both entering overbought on a daily chart. This means that future bullish advances will be more difficult to achieve and the chances of a bearish bounce will increase. A lot will depend on the U.S. jobs data and until that is released, we expect ranging movement.
Fundamental Outlook
Monday UK banks are closed in observance of May Day and no major announcements are made; the first indicator of the week is the Manufacturing PMI, scheduled Tuesday and followed Wednesday by the Construction PMI. Thursday the Services PMI comes out and this is the last important economic indicator of the week, for the Pound. All three indicators are surveys of purchasing managers from their respective sectors and act as leading indicators of economic health. Higher numbers usually benefit the Pound but often the impact is mild. Of course, the U.S. jobs data will be a market mover for the pair.
WEEKLY ANALYSIS: UPTREND STILL INTACT, US DOLLAR FIGHTS FOR CONTROL
EUR/USD
Weekly Analysis: Last week started on a strong bullish note, with price spiking above 1.1450 resistance before making a sharp turn near 1.1615. The U.S. jobs report disappointed but despite this fact, the bulls didn’t manage to take back control.
Technical Outlook
Even if the latest move is down, we must note that the pair is making higher highs and is trading above the 50 days Exponential Moving Average so we are still in a bullish market. This suggests that once support is reached, we may see a bullish bounce and the first place where this can happen is the 1.1335 level; by the time price reaches it, probably the moving average will climb and will be in close vicinity, thus creating a confluence zone that will increase the probability of a move north. On the other hand, a break of this zone would suggest that price is headed towards the zone around 1.1200, suggesting that the uptrend is coming to an end.
Fundamental Outlook
The week ahead lacks major fundamental events, especially in its first part. It is worth mentioning that Monday the Eurogroup Meetings take place, attended by key figures from the political and financial scene, but Tuesday and Wednesday are slow days, with nothing important on the calendar. Thursday the U.S. Unemployment Claims will reveal the number of persons who applied for unemployment related aid, but this indicator is released each week and that’s why its impact tends to be mild; however, a higher number can weaken the US Dollar to some extent.
Friday is the busiest day of the week, with the release of the German Preliminary Gross Domestic Product and also the U.S. Retail Sales. Both are key indicators of economic health and can strongly affect the respective currency, with higher numbers being beneficial. The same day the University of Michigan will release a Consumer Sentiment survey, which is indicative of future consumer spending levels.
GBP/USD
British economic data released throughout last week failed to meet expectations and this played an important role in the bearish action and the move below 1.4500.
Technical Outlook
The strong bounce at 1.4765 combined with the overbought position of both the Stochastic and Relative Strength Index makes us anticipate further downside movement. The first potential barrier in front of falling prices is the 50 days Exponential Moving Average but if this line is broken, we expect to see a touch of the bullish trend line seen on the chart above. To the upside, 1.4500 is the first potential resistance, followed by 1.4650 but our bias is bearish for the week ahead.
Fundamental Outlook
Wednesday the British Manufacturing Production comes out, showing changes in the total value of output generated by the manufacturing sector but the most important day of the week will be Thursday when the Bank of England will release their Inflation Report, the interest rate decision and a Rate Statement. The inflation report shows BoE’s projection regarding economic growth and inflation for the next 2 years and later in the day Governor Mark Carney will hold a press conference, discussing the contents of the report. As for the rate, this is not expected to change but volatility is usually generated by the event.
WEEKLY ANALYSIS: THE US DOLLAR STRIKES BACK, BEARS THREATEN THE UPTREND
EUR/USD
Weekly Analysis: The first days of last week were slow and choppy but action picked up later in the week when the bears managed to break support on the back of better than expected U.S. economic data. The uptrend is still intact but is severely weakened.
Technical Outlook
The pair broke 1.1335 support and is now struggling to move below the 50 days Exponential Moving Average. Last time price encountered this form of support, it bounced higher, so the same scenario may apply now, but a bearish break will put control in the hands of the sellers. If this happens, we will probably see a touch of 1.1210, followed by a small retracement to the upside; on the other hand, a bounce higher and a fast move above 1.1335 would make 1.1450 the target for the week.
Fundamental Outlook
The week starts slow, with Swiss, French and German banks being closed in observance of Whit Monday; no important indicators are released by the United States either. Tuesday action picks up with the release of the always important U.S. Consumer Price Index, which is the main gauge of inflation. Wednesday the FOMC will release the Minutes of their latest Meeting, offering insights into the reasons that generated the rate votes. More importantly, this document may contain hints about the pace of future rate changes and if this is the case, the US Dollar is likely to have a strong response.
Thursday the Philly Fed Manufacturing Index coms out, showing the state of the manufacturing sector according to the opinions of surveyed manufacturers and Friday is another slow day, with the U.S. Existing Home Sales numbers being the only notable event.
GBP/USD
The first 4 days of the week that just ended were incredibly choppy and all moves in one direction were quickly reversed. It seems the pair is now finally picking a direction but support is still in the way.
Technical Outlook
The pair finished the week below the 50 days Exponential Moving Average but the support at 1.4350 is still intact; the Stochastic is entering oversold but the Relative Strength Index still has a long way to go and all this paints a blurry picture, with reasons for price to go up as well as down. We slightly favor the sell side because momentum is finally starting to pick up after a few days of sideways movement, so we anticipate a break of 1.4350 and a touch of the bullish trend line seen on the chart above.
Fundamental Outlook
The first British event of the week is scheduled Tuesday: the Consumer Price Index which measures changes in the price that consumers pay for their purchases. It is the main gauge of inflation and usually creates a strong impact, with higher numbers being beneficial for the Pound. Wednesday we take a look into the unemployment situation with the release of the Claimant Count Change, an indicator that shows changes in the number of people who applied for unemployment related help. Higher numbers are usually detrimental for the Pound, showing a possible decrease in economic activity and consumer spending.
The last major event of the week is the release of the British Retail Sales, scheduled Thursday. This kind of sales represents a big chunk of the entire consumer spending which in turn accounts for a major part of the entire economic activity, thus higher numbers usually strengthen the Pound.
WEEKLY ANALYSIS: US DOLLAR ADVANCES ON THE BACK OF FED RATE HIKE OPTIMISM
EUR/USD
Weekly Analysis: The most important day of last week was Wednesday when the FOMC Minutes came out, showing optimism about a potential rate hike in June. This strengthened the US Dollar, driving the pair below support and generating an overall bearish week.
Technical Outlook
The 50 period Exponential Moving Average was broken decisively last week and this could be the beginning of an extended period of bearish movement. Currently price is trying to break the barrier at 1.1210 and if it manages to do so, we expect it to drop towards 1.1060; however, the oversold condition of the Stochastic plays against this scenario and may trigger a bullish retracement (the RSI is also close to oversold). Our bias for the week is bearish as long as the pair remains below the 50 days EMA but we expect some bullish retracements.
Fundamental Outlook
The first event on the calendar is the release Monday of the Eurozone Manufacturing PMI, a survey of about 3,000 purchasing managers that asks respondents to give their opinion on the business conditions in the manufacturing sector. Tuesday we have the German ZEW Economic Sentiment (a survey of about 275 German analysts and professional investors regarding their 6 month outlook for Germany) and the same day the Eurogroup Meetings start.
Wednesday is another day for surveys, with the highlight being the German IFO Business Climate. It has a large sample of about 7,000 businesses and this makes it a high impact indicator but usually the effect is limited if the actual number matches analysts’ expectations. Thursday we turn to the U.S for the release of the Durable Goods Orders (goods with a life expectancy of at least 3 years) and Friday we remain on the US Dollar side for the release of the Preliminary version of the Gross Domestic Product, which is considered the main gauge of overall economic performance.
GBP/USD
The Pound got a boost from a poll that showed that a Brexit is less probable and that the majority of surveyed people would rather remain in the EU. Most of the gains were erased Friday when the greenback strengthened.
Technical Outlook
The pair bounced almost perfectly at 1.4650 and now the bears are struggling to break the support at 1.4500. If they manage to do so, we expect a move into 1.4350; a break of the bullish trend line seen on the chart above would suggest that the pair will enter a period of bearish movement. The 50 period Exponential Moving Average is close to the mentioned support zones, adding strength to them and making a break more important.
Fundamental Outlook
The Pound has a slow week ahead, with only two notable releases: Tuesday the Public Sector Net Borrowing numbers come out and Thursday the Second Estimate Gross Domestic Product is released. The former indicator shows the difference between spending and income for public corporations and government during the previous month while the GDP is the main gauge of economic performance, thus it has a strong impact on the currency.
WEEKLY ANALYSIS: ECB INTEREST RATE ANNOUNCEMENT, U.S. JOBS DATA – THE INGREDIENTS FOR WILD SWINGS
EUR/USD
Weekly Analysis: The greenback won the battle against the Euro last week, breaking support and the bullish trend line seen on the chart below. The economic calendar didn’t reveal major events but optimism about a June rate hike kicked in, helping the US Dollar.
Technical Outlook
After breaking 1.1210, the pair returned to re-test it from below, bouncing lower and thus confirming the level as resistance. The bullish trend line is also broken and the pair is below the 50 days Exponential Moving Average, so all things point towards an extended move south but as we can note, the Stochastic is oversold and the Relative Strength Index is close to its 30 level. This fact increases the chances of a bullish bounce but we expect 1.1060 to be tested this week and there we will probably see a move higher.
Fundamental Outlook
The economic week opens Monday with the release of the German Consumer Price Index, an always important gauge of inflation that can positively affect the Euro if it shows higher numbers; on the US Dollar side, banks will be closed in observance of Memorial Day so we don’t have any major releases. Tuesday the Eurozone CPI Flash Estimate comes out, followed later in the day by the U.S. Consumer Confidence, a survey of about 5,000 households that tries to gauge the overall opinion about job availability, business conditions and economic environment.
Wednesday is a slow day for the Euro, while the greenback will be affected by the release of the U.S. Manufacturing PMI. This is another survey that asks purchasing managers from the manufacturing sector to give their assessment about the overall performance of said sector. Thursday will be the busiest day for the Euro as the ECB announces the interest rate and ECB President Mario Draghi holds his usual press conference. Although the rate is not expected to change, volatility is likely to surge during the press conference, so as always, caution is recommended.
Friday is the greenback’s turn to steal the spotlight with the release of the Non-Farm Employment Change (Non-Farm Payrolls). This indicator shows how many new jobs were created during the previous month and is considered the most important jobs related indicator for the United States. Almost always this release is accompanied by strong movement and increased volatility.
GBP/USD
Last week was overall bullish but the Pound gave back some of the early gains later in the week. The move up seems exhausted now as the pair failed to clearly threaten key resistance.
Technical Outlook
The bullish break of 1.4650 resistance (seen earlier in the week) did not take price into 1.4765 as expected and instead the pair returned below the broken level. This shows that the bulls are starting to fade away and that we will probably see a move into 1.4500 this week; the 50 days Exponential Moving Average is close to 1.4500, thus creating a confluence zone that will be difficult to break but if the bears manage to do that, the pair is likely to start a new short term downtrend.
Fundamental Outlook
Monday UK banks will be closed, celebrating Spring Bank Holiday so the economic calendar is empty. The rest of the week is filled with surveys: Wednesday the Manufacturing PMI comes out, followed Thursday by the Construction PMI and Friday by the Services PMI. These are all leading indicators of economic health, derived from the opinions of purchasing managers from the respective sectors and usually, higher numbers trigger Pound strength. As always, the pair will be directly influenced by the U.S. events scheduled throughout the week.
Weekly Analysis: The first four days of last week were slow and without major developments but all that changed once the NFP numbers came out, showing a disappointing employment situation in the United States and weakening the US Dollar.
Technical Outlook
Price bounced at a bullish trend line and is now trading above the 50 period Exponential Moving Average, the oscillators are moving out of oversold with strong bullish momentum and the U.S. jobs report weakened the greenback severely. All this points to an extended climb that may very well take the pair into the zone around 1.1450, so our bias is bullish for the week ahead but we also expect smaller moves to the downside, mainly because usually after such a strong climb, price retraces a bit.
Fundamental Outlook
The week ahead opens Monday with a speech of Fed Chair Janet Yellen; she will speak at a luncheon in Philadelphia and will touch the topics of monetary policy and economic outlook so we expect a strong influence on the US Dollar. Tuesday and Wednesday are slow days, without major releases while Thursday’s only notable event is a speech of ECB President Mario Draghi at the Brussels Economic Forum.
The lackluster economic scene extends into Friday when the only major release is the University of Michigan Consumer Sentiment survey. About 500 consumers are asked to rate the current level of economic conditions and usually a higher reading suggests that consumer spending is likely to increase in the near future; this in turn means that economic activity will pick up, bringing a stronger greenback.
GBP/USD
Before the NFP data was released, the Pound was losing the battle against the US Dollar, weakening throughout the week. Some of the losses were erased when the U.S. employment data came out but the week still finished lower than it started.
Technical Outlook
The bullish trend line seen on the chart above still acts as good support as seen from last week’s price action and now the pair is trading above the 50 period Exponential Moving Average. Although these are signs that price may be headed higher, the bulls clearly showed weakness last week and could only make advances on the back of much worse than expected U.S. economic data. Both currencies are weak at the moment but as long as the pair stays above the trend line, we expect further upside, with 1.4650 as target.
Fundamental Outlook
Same as the Euro and Dollar, the Pound has a slow week ahead, with the only notable release being the Manufacturing Production, scheduled Wednesday. The indicator shows changes in the total value of output generated by the manufacturing sector but usually has a mild impact on the Pound if the actual number matches analysts’ forecast or comes very close. Nonetheless, higher numbers are beneficial for the currency.
Weekly Analysis: The US Dollar made a spectacular comeback during the last 2 days of last week, bounced at resistance and erased most of the losses incurred a week before. Short term momentum favors the bears as the pair moved below the 50 period EMA.
Technical Outlook
We see bearish pressure building up, following the failed attempt to break 1.1400 resistance. Now price is trading below the 50 period Exponential Moving Average but although a daily candle has closed below the line, we cannot deem it a true break just yet. However, the Stochastic and Relative Strength Index are showing a bearish bias and favor further downside, so for this week we expect a move into 1.1210 and maybe a break of the bullish trend line seen on the chart if the pair can stay below the moving average.
Fundamental Outlook
The week starts slowly, without any major announcements Monday but Tuesday action picks up with the release of an important U.S. indicator: the Retail Sales. Higher numbers usually strengthen the US Dollar because retail sales account for the major part of consumer spending, which in turn represents a hefty part of the entire economic activity.
Wednesday we remain on the US Dollar side for the release of the Federal Funds Rate as well as the FOMC Statement which will offer details regarding the rate decision. Analysts don’t expect a rate change but any hints about a near-future hike are likely to trigger strong greenback movement.
Thursday we receive inflation data from the United States in the form of the Consumer Price Index and the week finishes Friday with a speech of ECB President Mario Draghi, in Munich. Both these events can have a strong influence on their respective currency so caution is recommended.
GBP/USD
Bearish pressure on the Pound mounted late last week as polls showed that now more people favor a separation of Britain from the European Union.
Technical Outlook
After the long wicked candle that bounced at 1.4650 resistance, the pair fell through the bullish trend line and the support at 1.4350, setting the stage for an extended period of bearish movement. The strong drop was triggered by the polls we mentioned earlier and since we are less than 2 weeks away from the actual referendum (23 June 2016), we expect more of these polls to come out and to influence the Pound’s direction. Short term control belongs to the bears but caution is recommended.
Fundamental Outlook
The first event of the week for the Pound is the Consumer Price Index, released Tuesday; this is the main gauge of inflation and shows changes in the price consumers pay for the goods and services they purchase. Usually the impact is strong, with higher numbers strengthening the Pound.
The Claimant Count Change comes out Wednesday, showing changes in the number of people who ask for unemployment related social help and Thursday will be the busiest day for the Pound as the British Retail Sales come out, as well as the Interest Rate and a breakdown of the MPC members’ votes. Although the rate is not expected to change for a long while, the event still creates volatility and sometimes irregular price action. As always, the U.S. events will have a major impact on the pair’s movement.
