GBP/USD dropped to 30-year lows last week, as markets crashed following the Brexit referendum in the UK. The pair lost 1100 points on the week, closing at 1.3660. Quite a few events await traders this week in addition to the Brexit fallout. Here is an outlook for the upcoming events and an updated technical analysis, with much lower levels.
Last week’s Brexit vote in the UK sent shock waves in Britain and across Europe. Brexit referendum vote to leave the EU stunned the markets, .Brits The vote to leave the EU stunned the markets, which had expected the vote to favor remaining in the bloc . In the US, Yellen sounded quite dovish and a rate hike is unlikely before September at the earliest.
GBP/USD graph with support and resistance lines on it. Click to enlarge:
- CBI Realized Sales: Tuesday, 10:00. The indicator bounced back last in May, posting a gain of 7 points, close to expectations. The upward trend is expected to continue, with a forecast of 9 points in June.
- Nationwide HPI: Wednesday, 6:00. This indicator gauges inflation in the housing sector. The index has posted two straight gains of 0.2%. Little change is expected in the June release.
- Net Lending to Individuals: Wednesday, 8:30. Stronger credit levels usually translate into increased consumer spending, a key driver of economic growth. The April reading plunged to GBP 1.6 billion, well short of the forecast of GBP 5.3 billion. The markets are expecting an improvement in May, with an estimate of GBP 2.9 billion.
- GfK Consumer Confidence: Wednesday. 23:05. The indicator has not posted a gain since January, pointing to ongoing pessimism amongst British consumers. Another decline is expected in June, with an estimate of -3 points.
- Current Account: Thursday, 8:30. The current account defcit jumped in Q1 to GBP 32.7 billion, well above the estimate of GBP 21.1 billion. The forecast for Q2 stands at a deficit of GBP 28.1 billion.
- FInal GDP: Friday, 8:30. Second Estimate GDP came in at 0.4%, matching the forecast. The estimate for Final GDP is also 0.4%.
- Manufacturing PMI: Friday, 8:30. The week wraps up with this key indicator. In May, the indicator came in at 50.1 points, pointing to stagnation in the manufacturing sector. The estimate for June is 50.2 points.
* All times are GMT
GBP/USD Technical Analysis
GBP/USD opened the week at 1.4577 and climbed to a high of 1.5015 late in the week. The pair then reversed directions in stunning fashion and dropped to a low of 1.3219. The pair closed the week at 1.3660.
Technical lines from top to bottom
With the pound plunging to 30-year lows last week, we begin at much lower levels.
1.4000 is a psychologically important line. It had provided support since March.
1.3912 has switched to a resistance line.
1.3737 is the next resistance line.
1.3600 is an immediate support line.
1.3426 is providing support. It was tested last week as the pound dropped close to 1.32 before recovering.
1.3276 is the final support line for now.
I am bearish on GBP/USD.
Britain is in disarray after the stunning referendum vote, and the political turmoil and instability could push the pound lower. Traders can expect volatility next week from the pound, as the UK and Europe face the uncertainty of the British decision to leave the EU.