GBP/USD Forecast April 19-23 – Pound Punches Above 1.38

 

10 and 20 us dollar bill

GBP/USD climbed close to 1 percent last week, reversing the losses seen a week prior. The upcoming week has five releases. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.

In the UK, the economy posted a modest gain of 0.4% in February. Manufacturing Production rebounded with a gain of 1.3% in February, well above the estimate of 0.5%.

In the US, CPI rose in March, but the reaction of the US dollar was muted. Headline CPI climbed from 0.4% to 0.6% and Core CPI improved to 0.3%, up from 0.1%. Retail sales soared in March – headline retail sales came in at 9.8% and the core reading rose 8.4%, well above the forecast.

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

  1. Employment Report: Tuesday, 6:00.  Wage growth has been at high levels. In January, wage growth came in at 4.8% and the estimate for February stands at 4.7%. Claimant Change jumped to 86.6 thousand in February and is expected to fall to 24.5 thousand in March.
  2. Inflation: Wednesday, 6:00. With lockdown restrictions easing, inflation is expected to move higher. Headline CPI is projected to rise from 0.8% in March, up from 0.4%, while Core CPI is expected to climb from 0.9% to 1.1%.  
  3. CBI Industrial Order Expectations: Thursday, 10:00. Sales order volume is expected to increase for the first time in two years, with an estimate of 3 for the April release. In March, the indicator came in at -5 points.
  4. GfK Consumer Confidence: Thursday, 23:01. The UK consumer remains pessimistic, but the index is showing improvement. The March reading came in at -16 and the consensus for April stands at -12.
  5. Retail Sales: Friday, 6:00. Retail sales bounced back in February, with a gain of 2.1%. The estimate for March is 1.5%.
  6. Manufacturing PMI: Friday, 8:30. Manufacturing continues to show strong growth, well above the 50-level which separates contraction from expansion. The forecast for April stands at 59.0.
  7. Services PMI: Friday, 8:30. Services moved back to expansionary territory in February, rising from 49.7 to 56.8. The upswing is expected to continue in March, with an estimate of 58.6.
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