GBP/USD broke out and climbed sharply this week, pushing across the 1.60 line. The upcoming week has six releases, highlighted by Claimant Count Change. Here is an outlook of the upcoming events, and an updated technical analysis for GBP/USD.
UK releases looked sharp this week, highlighted by strong numbers in the manufacturing and services sectors. As well, the pound took full advantage of the weak US employment release to make further gains against the greenback.
*All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.5865 and touched a low of 1.5850. The pair then rebounded to climb as high as 1.6034, as resistance at 1.6060 (discussed last week) held firm. GBP/USD closed at 1.6007.
Technical lines from top to bottom:
With last week’s surge by the pound, we begin at higher levels. There is resistance at 1.6475. This line has not been tested since August 2011. This is followed by the 1.6343 line. Next, there is resistance at 1.6247. This line was tested in late April, but has held firm since. The next line of resistance is 1.6122, which has not been tested since May. Next, there is resistance at 1.6060.
There is weak support at 1.5992. This line was providing resistance and protecting the important 1.60 level, but was breached this week as the pound flexed some muscle. It could be tested if the dollar rebounds. Next, 1.5930 is providing support, after being in a resistance role since May. The next support line is at 1.5805. This line has strengthened as the pair trades at higher levels. This is followed by 1.5750, which saw a lot of action in June and July.
Next is 1.5648, which continues to provide strong support. This is followed by support at the round figure of 1.5600. Below, there is support at 1.5521, which was last tested in August. The next line of support is at 1.5415. The final support level for now is 1.5348, which has held firm since June.
I am bullish on GBP/USD.
Stronger UK releases and poor employment data out of the US was the ideal recipe for the pound’s rally last week. Speculation over QE is increasing as the US economy continues to under-perform, and this could help the pound extend its gains against the greenback.