GBP/USD hit 1.6177 on Wednesday, the pair’s highest since October 5; the pair subsequently consolidated at 1.6001 by close of trade on Friday, down 0.41% for the week.
Cable is likely to find near-term support at 1.5975, the low of October 10 and resistance at 1.6065, Friday’s high.
Deutsche Bank’s chief UK economist George Buckley said: “If you look at the recovery from previous recessions in the 1970s, 1980s and 1990s, by now GDP had regained the pre-recession peak. But in the UK we are still 4.1 per cent below peak output in 2008.
“This is slower even than the 1930s and we believe it could be until 2014 until we regain all the ground lost.”
The UK’s languishing performance puts it second only to struggling Italy in terms of lost output among the G7′s major economies, according to Deutsche Bank. Even Japan – struck by a catastrophic tsunami in March last year – has made more progress towards making up lost ground, with output 1.9 per cent below its 2008 peak.
The key support factor is the rising trendling from May low of 1.5265. There is still room to about 1.58 before the market meets this trendline. To the upside, the break of the consolidation trendline opens up 1.63. Clearing above that key resistance area than opens up the 2011 highs near 1.6620 and 1.6750.
The GBP/USD was cracking a declining consolidation trendline. Clear above 1.6180 would probably have done so and return focus to 1.63. However cable respected the trendline as seen in the 4H chart and fell sharply at the end of the 10/18 US session. The heavy price action has brought the RSI to 40, below which reflects lost of the re-established bullish momentum in this time-frame. Also falling below 1.6050, and the 61.8% retracement there shows this downswing might be more than just a correction to the rally since last week.
Tuesday, October 23
The U.K. is to produce industry data on mortgage approvals, a leading indicator of demand in the housing sector.
Wednesday, October 24
The U.K. is to publish industry data on industrial order expectations, an important indicator of economic health.
The U.S. is to release official data on new home sales, a leading indicator of economic health, as well as government data on crude oil inventories.
Later Wednesday, the Federal Reserve is to announce its benchmark interest rate and release its closely watched monetary policy statement.
Thursday, October 25
The U.K. is to release preliminary data on third quarter gross domestic product; the foremost indicator of economic activity and the leading gauge of the economy’s health.
The U.S. is to release official data on durable goods orders, a leading indicator of production, as well as data on pending home sales and initial jobless claims.
Friday, October 26
The U.S. is to round up the week with preliminary data on third quarter GDP; the foremost indicator of economic activity and the leading gauge of the economy’s health. In addition, the University of Michigan is to release revised data on consumer sentiment.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service
Copyright Live Trading News All rights reserved.