GBP/USD plunged 275 points points last week, its sharpest weekly drop since early July. The pair closed just shy of the 1.30 level. There are just four events this week. Here is an outlook on the major market-movers and updated technical analysis for GBP/USD.
The pound posted sharp losses after British CPI missed its estimate, with a reading of 0.6%. retail sales contracted, but beat expectations. The BoE did not lower rates again, but did send broad hints that a November cut was a strong possibility. US numbers were mixed last week.Retail sales contracted, but beat expectations.However, CPI and jobless claims were slightly better than expected.
GBP/USD graph with support and resistance lines on it. Click to enlarge:
30-year Bond Auction: Tuesday, Tentative. The yield on 30-year bonds dipped to 2.10% in June, down from 2.35% in the previous release. Will the downward trend continue in the September auction?
Public Sector Net Borrowing: Wednesday, 8:30. The UK posted a rare surplus in the July release, with a reading of GBP 1.5 billion. This was short of the forecast of a GBP 2.3 billion surplus. The markets are braced for a sharp downturn in the August report, with a forecast of a decline of GBP 10.5 billion.
BoE Quarterly Bulletin: Wednesday, 11:00. This minor indicator contains market analysis and commentary on monetary policy operations. Analysts will be looking for any clues as to future monetary policy. The BoE has hinted that a November rate cut is a strong possibility.
FPC Statement: Thursday, 8:30. The Financial Policy statement provides an analysis of the financial stability of the British banking system. The markets will be particularly interested in the economic conditions which prodded the bank to lower rates and expand the asset-purchase scheme in August.
CBI Industrial Order Expectations: Thursday, 10:00. The indicator continues to weaken, as manufacturers remain pessimistic about market conditions. The August reading dipped to minus -5, but this was better than the forecast of minus -9. Another reading of minus -5 is expected in the September reading.
BOE Deputy Governor Jon Cunliffe Speaks: Thursday, 13:30. Cunliffe will speak at an event in Frankfurt. A speech that is more hawkish than expected is bullish for the British pound.
