The British pound lost close to two cents against the US dollar as GBP/USD closed at 1.5484. The upcoming week has eight releases, including Manufacturing Production. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD.
The Bank of England maintained interest rates at 0.50%, but did inject 50 billion pounds in QE, for a total of 375B. Weak US employment numbers also helped the dollar, as investors sought safe havens due to the turmoil in Europe and the ECB interest rate cut.
*All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.5678. The pair rose to a high of 1.5721, as resistance held firm at 1.5750 (discussed last week). GBP/USD then retraced, falling all the way to 1.5461. The pair closed the week at 1.5484.
Technical levels from top to bottom
With the pound slumping, we start this week at lower levels. There is resistance at 1.6060. Below, is the line of 1.5992, protecting the important 1.60 level. This is followed by resistance at 1.5930. The next resistance line is just above the 1.58 line, at 1.5805. This line was last breached in late May, as the pound went on a sharp down slide. Close by is 1.5750, which held firm as the pound made a brief push upwards early in the week.
Next, 1.5648 which has been alternating between support and resistance roles, is currently providing resistance following the strong surge by the dollar. This is followed by the round figure of 1.5600, which just last week was providing support to the pair. Next, 1.5521 was breached by GBP/USD and is providing weak resistance. This line could be tested if the pound rebounds.
The pair is receiving support at 1.5415. Below, there is support at 1.5361, a line which has held firm since early June. Close by, there is support at 1.5309. This line has not been breached since September 2010. This is followed by support at 1.5229. The next support level is at 1.5124, which has not been tested since July 2010. Below, there is support at 1.5054, which was last breached when the pair moved up sharply in June 2010. The final support level for now is 1.4891.
I am bearish on GBP/USD.
GBP/USD exhibited a steady downswing this past week, and we could see the trend continue. The implementation of QE3 by the BOE underscores the weak UK economy, and nervous markets could mean further trouble for the pound.