GBP/USD Weekly Analysis – May 8, 2017
The GBPUSD pair did make some decent progress last week but the bulls might be getting a bit concerned over the fact that the pair has not been able to progress beyond the highs from last week. Though the bullish trend in the pair is pretty much evident for everyone to see, the pair has not been able to capitalise on the weakness in the dollar so far, as much as the euro has been able to do, and the round and important psychological figure of 1.30 seems to be hanging around the neck of the pair like an albatross which is weighing down the pair.
GBPUSD Steady But Slow
Last week, we did see a range of PMI data from the UK like the services, manufacturing and construction PMI and though all of these continued to show that the UK economy was in pretty good shape and has not been affected by the Brexit process as yet, all it did was to keep the GBPUSD pair well bid but it could not push the pair beyond the crucial 1.30 region. We also saw the dollar weaken across the board towards the end of last week on the back of some weak wages data but again, this only managed to keep the pair near its highs and the bulls again could not use the momentum to push the pair through the 1.30 region.
As a result of this, the pair traded in a choppy manner during the course of the week with some strong support coming in for GBPUSD at the 1.2860 region and with the region around 1.30 capping any upmove so far. There was not much geopolitical news around except for some political posturing from the UK PM May and the ECB as they prepare themselves for the UK elections and also for the Brexit talks in a few months time.
Looking ahead to the coming week, we have the BOE rate decision where the bank is expected to keep the rates on hold though the voting pattern and the summary would be noted with interest to see whether the bank has any intention of rising rates in the near future. On the other hand, we have the retail sales, PPI and CPI data from the US which should keep the GBPUSD volatile. We still believe that the pair is firmly in the grip of bulls and we believe that 1.30 would be broken soon (maybe as soon as Monday) and then we should be moving towards our medium term target of 1.34.