August 3, 2022
  • August 3, 2022

GBP / USD flirts with 1.40 as dollar comes under pressure

By on April 25, 2021 0

GBP / USD broke through the 1.40 level last week, but was unable to hold above that line and had to settle for small gains during the week. The coming week has five releases. Here is an overview of the highlights and an updated technical analysis for GBP / USD.

UK unemployment figures were mixed. The number of applicants fell by 10.1 thousand, down from 86.6 thousand and exceeding the forecast of 24.5 thousand. However, wage growth underperformed, dropping from 4.8% to 4.5% and missing the estimate of 4.7%. The unemployment rate fell to 4.9% from 5.0%.

Inflation rose in March as the headline CPI climbed to 0.7% from 0.4%. Core CPI rose to 1.1%, from 0.9%. Retail sales for March jumped 5.4%, from 2.1% and well above the 1.5% estimate. The week ended on a good note, with manufacturing and services PMIs outperforming and accelerating in March, with readings of 60.7 and 60.1, respectively.

In the United States, jobless claims fell for a second straight week to 547,000, from 576,000 previously. The manufacturing PMI index in March improved to 60.6 from 59.0. A reading above the neutral 50 level indicates growth.

GBP / USD daily chart with support and resistance lines. Click to enlarge:

  1. CBI made sales: Tuesday, 10:00 a.m. Sales volumes were deeply bogged down in negative territory, with the last two readings at -45. The indicator should enter positive territory in April, with an estimate of +9 points.
  2. BRC store price index: Tuesday, 23:01. The British Retail Consortium continues to post declines and reached -2.4% in March. We are now awaiting data for April.

Technical lines from top to bottom:

We start with resistance at 1.4070.

1.3956 is next.

1.3824 (mentioned last week) is the first level of support.

1.3726 is next.

1.3612 is the final support level at this time.

.

I am bullish on the GBP / USD pair

The US dollar continues to stumble, while the pound showed last week that the 1.40 level is within reach. The UK economy will strengthen as the reopening continues, which bodes well for the pound.

Further reading:

Get the 5 most predictable currency pairs