GBP/USD: Friday's turnaround leaves cable supported by 10-D SMA
|- The pound was heavy on the back of The Sun interview with President Trump, but Friday's turnaround leaves cable supported by 10-D SMA.
- After all the headlines, GBP/USD emerged a little stronger over the day, around 1.3230.
- We have a busy week ahead for the pound, with UK labour market report, June (Tuesday), UK producer prices, June (Wednesday), UK retail sales, June (Thursday) and UK public finances, June (Friday).
Supported by the 10-D SMA and 100-hs SMA, GBP/USD is currently trading at 1.3227 having made a high of 1.3231 from a low of 1.3224 in early Asia, up from the lows of -0.64% after last weeks Downbear European session.
GBP/USD staged an impressive recovery in NY on Friday, climbing from 1.3154, (1.3102 was the European session low), for a high of 1.3238 in Friday's NY close. There had been a number of headlines on turn-around Friday,
Firstly, the pound was heavy on the back of The Sun interview with President Trump where he was hard on MP May's White Paper proposal suggesting that the US will not do a free trade deal with the UK due to the soft approach to Brexit that the UK has taken. However, in the press conference with UK PM May, he said that the US would welcome a post-Brexit bilateral trade deal. There was also a speech by Bank of England deputy governor Cunliffe, who argued for a cautious approach to raising rates. After all the headlines, GBP/USD emerged a little stronger over the day, around 1.3230.
The outlook for the UK and the week ahead
Meanwhile, in a busy week ahead for the pound, with UK labour market report, June (Tuesday), UK producer prices, June (Wednesday), UK retail sales, June (Thursday) and UK public finances, June (Friday), analysts at Nomura offered a snapshot outlook for the UK in general:
- Recent political news has seen two key ministers resign following PM Theresa May’s proposal for a soft-style Brexit.
- Near term: slow UK domestic demand growth as above-target inflation and political uncertainty dominate stronger net exports.
- We expect UK GDP growth to average 1.5% over 2018 and 2019, with inflation falling as the FX impact wanes in 2018.
- August rate hike forecast, then a move every six months – pace slows during QE roll-off (to begin when rates reach 1.50%).
GBP/USD levels
Valeria Bednarik, chief analyst at FXStreet explained, from a technical point of view, that the upward potential remains limited according to technical readings in the daily chart:
"The pair hovers around a flat 20 SMA while technical indicators are stuck to their midlines, now aiming higher but with no actual strength. Shorter term, and according to the 4 hours chart, technical indicators lost upward strength around their midlines after correcting oversold conditions, while the price settled a few pips above a mild bearish 20 SMA, also indicating limited buying interest."
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