Forex – GBP/USD Weekly Outlook: July 25-29
Written on July 23, 2011 by Julia Woodard
Forexpros – Last week saw the pound ease back against the U.S. dollar on Friday, but remain well supported close to a five-week high, as an agreement on a second bailout package for Greece bolstered market sentiment.
GBP/USD hit 1.4437 on Friday, the pair’s highest since July 6; the pair subsequently consolidated at 1.4355 by close of trade on Friday, gaining 1.70% over the week.
Cable is likely to find support at 1.4138, the low of July 21 and resistance at 1.4465, the low of July 7.
On Thursday, euro zone leaders announced a new aid package for Greece worth EUR159 billion, with bondholders agreeing to contribute to the bailout. They also expanded the role of the European Financial Stability Facility to purchase bonds from indebted nations, assist troubled banks and offer credit lines.
Earlier in the week, the pound found support, after the minutes of the Bank of England’s July policy meeting were slightly less dovish than expected.
There was no mention of policymakers favoring further monetary easing, after the minutes of the bank’s June meeting showed that some policymakers believed additional monetary stimulus would be necessary as the outlook for growth had weakened.
Meanwhile, the U.S. Senate rejected a USD3 trillion deficit reduction plan on Friday, adding to fears over a potential default ahead of the August 2 deadline to raise the country’s USD14.3 trillion debt ceiling.
Ratings agency Standard & Poors said Thursday that there is a 50-50 chance that the triple-A credit rating of the U.S. could be cut within three months.
Looking at the week ahead, the release of data on second quarter data on gross domestic product will be a key event for the pound, while investors will be focusing on U.S. efforts to agree on a deficit-reduction plan and avert a default.
Markets will also be looking towards Friday’s data on U.S. second quarter GDP, in order to gauge the strength of the U.S. economic recovery.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday July 25
The U.K. is to publish industry data on mortgage approvals, a leading indicator of housing market demand.
Tuesday, July 26
The U.K. is to release preliminary data on second quarter GDP, the broadest measure of economic activity and the primary gauge of the economys health.
Later in the day, the U.S. is to publish government data on new home sales, a leading indicator of economic health, as well as data on consumer confidence and house price inflation.
Wednesday, July 27
The U.K. is to publish data on industrial order expectations, a leading indicator of economic health.
The U.S. is to publish official data on durable goods orders, a leading indicator of production, as well as government data on crude oil stockpiles. Later in the day, the Federal Reserve is to publish its Beige Book, which contains data the bank looks at when making its next interest rate decision.
Thursday, July 28
The U.K. is to publish industry data on retail sales, a leading indicator of consumer spending.
Later Thursday, the U.S. is to release government data on initial jobless claims, a leading indicator of economic health, as well as industry data on pending home sales.
Friday, July 29
The U.K. is to release industry data on house price inflation, a leading indicator of the housing industrys health, as well as a report on consumer confidence, a leading indicator of consumer spending. In addition the BoE is to publish data on net lending to individuals and mortgage approvals, important indicators of economic health.
The U.S. is to round up the week with preliminary data on second quarter GDP, as well as a preliminary report on the GDP price index and an employment cost index. The U.S. is also to publish data on manufacturing activity in the Chicago area, while the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
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