GBPUSD BEARISH WAVE LEG CLOSES UP AFTER +300PIPS; BULLS RETURNING

FUNDAMENTAL BEAM

GBP/USD tumbled last week, as the pair dropped 250 points. GBP/USD closed the week at 1.5922. This week has a host of key events, incuding PMIs, Manufacturing Production and the asset purchase facility and interest rate decisions. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.

British releases had a tough week, as CBI Realized Sales plunged and Manufacturing PMI missed the estimate. US readings were mixed, but there was some relief in the markets as the all-important Unemployment Claims met expectations.

GBP/USD graph with support and resistance lines on it.

1. Construction PMI: Monday, 9:30. This is the first key event of the week. After a string of improving releases, the PMI disappointed last month. The index came in at 58.9 points, short of the estimate of 60.1. The markets are expecting no change in the upcoming release, with an estimate of 58.9.
2. BRC Retail Sales Monitor: Tuesday, 00:01. This indicator measures retail sales in the BRC group of stores. The indicator has been steadily dropping and fell to just 0.7% last month. This was the indicator’s lowest reading since April. The markets are hoping for a reversal of the downward trend.
3. Halifax HPI: Tuesday, 5th-7th. The housing price index posted a modest gain of 0.3% in September, shy of the estimate of 0.6%. Little change is expected in the upcoming release, with an estimate of 0.4%.
4. Services PMI: Tuesday, 9:30. Services PMI has been looking sharp, as the index has topped the 60 level for the past three readings, indicating strong expansion. The previous release came in at 60.3 points and little change is expected in the October reading.
5. BRC Shop Price Index: Wednesday, 00:01. This index measures inflation in the BRC chain of stores. The index continues to post negative readings and the September release came in at -0.2%.
6. Manufacturing Production: Wednesday, 9:30. This key release has been struggling, and the index posted a sharp drop of 1.2% last month, way off the estimate of 0.3%. The markets are expecting a rebound in October, with an estimate of 1.2%.
7. NIESR GDP Estimate: Wednesday, 15:00. This indicator allows analysts to track GDP, which is released each quarter, on a monthly basis. The indcator has been posting respectable releases lately, and came in at 0.8% in September. The markets will be hoping for another strong release for October.
8. Rate decision: Thursday, 12:00. No policy change is expected from the BOE. The current forward guidance policy is still young. Carney is likely to comment on this policy in the upcoming presentation of the quarterly inflation report. The interest rate in the UK will likely be raised during 2015, but the BOE will probably leave this declaration to the first half of 2014. The economy is certainly improving, but it seems that the official unemployment rate isn’t improving as fast as other indicators. A stronger pound would help curb the relatively high inflation, but Carney and co. aren’t expected to release a statement about this at this time.
9. Trade Balance: Friday, 9:30. The past two releases have posted deficits above 9 billion pounds, both of which were higher than their estimates. A slight improvement is expected in the upcoming release, with an estimate of -9.1 billion.

TECHNICAL BEAM

Following our predicted of the possible +1700 pips anticipate by our technical analysis of this pair; we have seen a drop of m ore than +300 pips already. However, this bearish m move might not come to completion going by fundamental news of released from the united states. The GREENBACK may just have enjoyed the much of the profit against other pair it can for now. 

Traders round the round are now looking for reasons to sell the currency and we might just been concluding likewise.

From our technical, we expect the pair to edge a little higher after complting a wave leg 2 and consequently looking forward to wave leg C or 3 at 1.6368. The future behaviour of the pair is as shown above.

NOTE: Price predictions produced by FibonacciPrice&PatternTrader may be affected by unforseen events like hurricane, earth quake, flood and other natural disasters consequently changing price patterns already predicted. Hence we advice strict adherence to money management techniques.

HAPPY TRADING