GBP/USD Outlook - January 5th to 9th, 2015
GBP/USD remained in a narrow sideways mode for the entire week, last week before a sharp fall on the Friday to 1.5327 before closing bearishly at 1.5328. In fact the difference of 1 pip between the low and close is due to rounding of the pipettes. The actual difference was just 0.5 pip.
Fundamental Facts for GBP/USD
There have been a few economic releases during last week due to the holidays. Overall the economic data from the U.K. was mixed. The Markit manufacturing PMI which came lower at 52.5 in December from November's 53.3. U.K. Mortgage approval data of November released last week was again slightly lower with 59.029K approvals as compared to previous month's 59.511K. On the other hand the consumer credit improved from October's GBP 1.085K to GBP 1.252K in November. Similarly the net lending to individuals improved to GBP 3.3 billion from previous month's GBP 2.7 billion. However the bearish outlook of euro-zone goes against the strength of the British pound strongly.
The U.S. data showed that the consumer confidence further improved from 91.00 to 92.6 and the pending home sales which grew to 4.1% from previous month's 2.1%. However the month over month construction spending witnessed a decline from 1.2% to -0.3% during the same month. The initial jobless claims from U.S. came out weak with 298K against the previous 281K. Markit manufacturing PMI from the U.S., for December, also came out weaker at 53.9 as compared to previous month's 54.8. ISM manufacturing PMI also witnessed a decline from 58.7 to 55.5 in December
GBP/USD Technical Trends
The recent fall proved to be a break out of the range movement which has been going on for past one and a half months. Not only that but is indicated the resistances of the lower edge and Kijun line of the daily Ichimoku cloud and also the 22-day EMA are in full force. Both the daily and weekly MACD are in bearish mode.
The already existing bearish outlook further strengthened with the fall of last Friday and we now expect some deeper declines. Please note that an approximate triple tops pattern is also emerging on the monthly chart. We now expect a good resistance in the zone of 1.5455 to 1.5486 on the upside. With this resistance in place, GBP/USD should target the next support zone of 1.5185 to 1.5200 next. A decisive break of this support should extend the decline to test the psychological support of 1.5000 next. Please note that the possibilities of a retest of 1.4813 cannot be ignored.
As mentioned above that we expect some good resistance in 1.5455/1.5486 range. However on the upside only a break over 1.5560 will start making the near-term outlook neutral but the overall outlook will still stay bearish till the trend of the final resistance at 55-day EMA continues. The current 55-day EMA is at 1.5672 but with any gains it will go up and hence the mid-term outlook will stay bearish till the price action is below 1.5786 of December 16the.
Analyze Yourself - Various views of GBP/USD Price-Action