Results of the past week:
GBP/USD spiked to 1.2560 in the course of the past week after Fed’s senior officials toned down expectation of a March hike and the US Treasury Secretary Steve Mnuchin failed to provide substantial details on the upcoming tax reforms. The economic calendar for GBP was light this week with UK fourth quarter GDP data being revised up to 0.7% and inflation report hearings hardly bringing any news.
With no significant fundamentals on the docket the pound has strengthened mainly due to the US dollar weakness.
Upcoming events:
Next week, the FOMC voting and non-voting members will be extremely talkative. Don’t miss Dallas President Robert Kaplan speaking on Monday and Wednesday, Fed’s Governor Lael Brainard – on Thursday, and Evans, Powell, Fischer and, most importantly Fed’s Chair Yellen all giving their comments on Friday. As you struggle to unravel the effect of their speeches, you might consider looking at the chart below exhibiting for hawks and doves at the FOMC.
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Another focus will on the UK manufacturing and construction PMI indexes, US preliminary GDP, CB consumer confidence index and ISM non-manufacturing and manufacturing PMI.
With strong economic data and insufficient hawkishness of the FOMC members, the sterling may well extend its gains next week. A decision of the Scottish government to hold another referendum on the Scottish Independence from the UK might clip the pound’s wings and send it into the negative territory.
Technical picture:
From a technical point of view, an advance above the resistances at 1.2580/1.2620 levels, should favor additional gains up to 1.2705 (February high). On the downside, there are some supports located at 1.2400 (100-day MA) and 1.2380 (the upper border of Ichimoku cloud on the daily timeframe) that can be tested in case of the breakout of 1.2475 level.
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Outlook:
The GBP/USD outlook for the present moment is neutral with immediate pressure on the upside in case of the breakout of 1.2580/1.2620 resistances, and possible rollback in case of a move below 1.2470.
Origin: FX BAZOOKA
