GBP/USD Forecast Dec.18-22 2017

GBP/USD continued falling, yet in a choppy manner amid mixed top-tier figures and a problematic advance on Brexit. The BOE also added to the mess. The upcoming week’s highlight is the final GDP report. Here are the key events and an updated technical analysis for GBP/USD.

EU leaders formally approved moving to the next phase of Brexit talks, but trade relations could remain complicated. In addition, May’s government suffered a defeat in parliament and the vulnerability was exposed. Data was mixed: inflation did not fall but actually breached the 3% y/y level. Retail sales jumped by 1.1% amid rising wages, but jobless claims rose than expected. All in all, the economy is looking mixed and a lot depends on what Brexit negotiations yield.

Updates:

GBP/USD daily graph with resistance and support lines on it. Click to enlarge:

  1. CBI Industrial Order Expectations: Monday, 11:00. This measure of the manufacturing sector by the Confederation of British Industry jumped to 17 points in November. The 550-strong survey is expected to remain positive but to slide to 14 points in December.
  2. CBI Realized Sales: Wednesday, 11:00. This measure by the CBI came out with even better numbers: 26 points amid its pool of 125 retail and wholesales firms. A drop to 21 points is on the cards now.
  3. GfK Consumer Confidence: Thursday, 00:01. The survey of around 2000 consumers showed a disappointing score of -12 points in November, implying a decrease in spending. A repeat of the same figure is on the cards for December.
  4. Public Sector Net Borrowing: Thursday, 9:30. Government borrowing has reached 7.5 billion pounds in October, worse than expected. Another rise to 8.6 billion is expected now. Higher government borrowing is negative for the economy in the longer run.
  5. Final GDP: Friday, 9:30. The third and final read of Q3 GDP will likely confirm the quarterly growth rate of 0.4% q/q. However, changes to the composition of growth and revisions to the y/y change are quite common. All in all, the economy grew at a slower pace in 2017.
  6. Current Account: Friday, 9:30. The UK has a significant current account deficit as well as a widening trade balance deficit. The current account stood at a negative 23.2 billion pounds in Q2. A narrower 21.3 billion deficit is on the cards for Q3. A big surprise in this figure can steal the show from the GDP figure.
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