The Pound is trading in the highest levels for many months, near a major resistance line. There are 4 major indicators this week: CPI, MPC Meeting Minutes, Retail Sales and Revised GDP. Will they send the Pound to new highs?
GBP/USD trades above 1.50 during the most of May. It destroyed the magical number of 1.50 at the beginning of the month, thus breaking a major peak and resistance line that was set on February 9th.
Last week, cable traded as high as 1.530, bouncing nicely at the next resistance line – 1.5370, that was the peak on January 8th.At the beginning of the new week, GBP/USD trades in a narrow range, below last week’s peak. At the time of writing, it’s at 1.5288.
The next hurdle for Pound is at 1.5720. GBP/USD was there at December 17th, a day before the huge tumbling down of the British Pound.
Major indicators this week in Britain
Since mid April, when I wrote about the Critical Week for the Pound, there weren’t so many important indicators in Britain.
- CPI is published on Tuesday. Britain doesn’t suffer from deflation nor inflation. Consumer Price Index is predicted to rise by 2.4% (annually adjusted). Expectations are for a weaker rise in prices. With low expectations, a hike in prices would boos the Pound. Higher prices mean that the 0.5% interest rate can’t hold for long and the BoE will have to act.
- MPC Meeting Minutes: In their last meeting, the distinguished members decided to expand treasury buying, thus enlarging the Quantitative Easing program. This move weakened the British Pound. Why did they make this decision? What are the next moves? There will be some answers on Wednesday, and this will shake the Pound.
- Retail Sales: British Retail Sales, published on Thursday, are expected to rise by 0.5%. Retail Sales are a major economic indicator. Expectations are positive, so exceeding them will be hard. Only a significant surprise will send the Pound higher. This could be a day of rest for GBP/USD.
- GDP: British Gross Domestic Product fell by 1.9% in the first quarter, at least according to the initial Prelim reading. This was disappointing when it was published. On Friday, the Revised GDP will be released. Naturally, this major indicator will shake the Pound. If the output is higher than expected, this could send the Pound to new highs.
GBP/USD is trading in long term uptrend. In order to make it to the next barrier, and break the resistance line, it needs the back wind of strong and important figures. This week provides many strong indicators.
Will they be strong enough to push the Pound to the next level?
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