GBP/USD Price Prediction: Cable Could be Hit Harder This Week
- Big fundamental data points will play a massive role in the direction of GBP this week.
- GBP/USD downside targets are eyed at 1.2800 and then the range of 1.2750-1.2650.
It is another week where GBP takes the spotlight with a raft of key economic data points being released from the UK. This comes after an extremely volatile week where GBP/USD finished another close in the red. In an already delicate time for the UK and its domestic currency, given the Brexit palaver, this slew of key fundamental data is only going to see volatility rising.
Recap Last Week
Cable last week came under quite a large amount of selling pressure, which was initially kicked off due to weaker PMI data. Britain had produced soft construction and services PMI data, which triggered the bears to get into action. Furthermore, the Bank of England released their monetary policy decision, where they left rates unchanged; however, officials were very much dovish. They slashed their growth forecasts, citing Brexit damages. GBP managed to reverse this initial spike to the downside, after Carney essentially hinted rate rises could still come. The market read between the lines following his comment: “There is upside for UK economy if there is clarity on Brexit deal sooner”.
Critical Data Points This Week
On Monday, UK will release its GDP figures, which are expected to cool across the board. This is not too much of a surprise, given lacklustre economic data points that have been released already this year, including falling retail sales and a drop-in consumer confidence to around weakest levels in more than fives years. PMI sectors are close to recession and most recently the BOE downgraded its growth forecasts. Elsewhere, later in the week, eyes will also be on the retail sales and CPI numbers, both of which are expected to cool. Should all above-detailed data come in soft, then expect further selling pressure to continue for GBP this week.
Technical Review – GBP/USD
The weekly chart view remains firmly bearish, following on from the last two consecutive weeks of losses. In terms of the daily, price action is currently trying to break down near-term demand. This can be observed between 1.3000 down to around 1.2915. Should the bears manage to convincingly break and close below, then eyes will be on a retest of 1.2800 to the downside. GBP/USD last traded down there on 17th January. Further downside targets would be the 1.2750-1.2650 range, where the next major area of demand can be seen. Shorts would likely be off the cards near-term if the price manages to break and close back above the psychological 1.3000 mark.
In terms of direction this week, it is very much going to be dictated by the above-listed key economic data points. The bears will likely capitalize on the described downside targets, only if the numbers disappoint market participants.
Featured image courtesy of Shutterstock.