What currencies to consider this week…
GBP/USD: forecast for November 13-17
Last week GBP/USD managed to stay above the support line since the start of the year. On Monday, however, bears almost wiped the pound’s recovery.
The pair is driven mainly by the UK political news. Turbulence surrounding Prime Minister Theresa May’s government is growing. Firstly, there was a string of scandals leading to two resignations from the cabinet during one week. Then a report came that 40 Conservative MPs are readying a leadership challenge. 8 more votes are needed to force May from office and replaced by another Conservative.
As a result, traders doubt that this government will be able to secure a strong deal in negotiations over Britain leaving the European Union. Comments of Brexit minister David Davis over the weekend emphasized the lack of progress in Brexit negotiations. Political uncertainty is expected to remain high in the near-term. This is going to keep hurting the pound.
Economic news from the UK was rather good. Manufacturing output rose by 0.7% in September, easily beating expectations of a 0.3% increase. Britain’s trade deficit has narrowed, partly due to a rise in exports to European countries. This week watch CPI data and Bank of England Governor’s speech on Tuesday and Thursday, labor market data on Wednesday and retail sales on Thursday.
GBP/USD once again failed to get above 100-week MA now at 1.3225. A daily close below support at 1.3070 will open the way down to the psychological level of 1.3000 and then to 200-day MA at 1.2870. As for resistance, it also lies at 1.3265 and 1.3330.