GBP/USD: eventful week ahead (video)
Kira Iukhtenko, FBS
GBP/USD spent the week in a sideways $1.7190/7060 range, forming a long-legged bearish candle on the weekly chart. Cable rushed to $1.7190, supported by strong UK inflation data. June CPI came at 1.9%, approaching the BOE 2% target and increasing the expectations of a sooner rate hike. However, buying interest was cooled down by Marc Carney and by the mixed bag of UK employment data. Unemployment declined to 6.5%, claimant count fell, but the average wage growth remains subdued. Slow wage growth gives the Bank of England room to hold interest rates at a lower level for longer time. The pair tested the levels below the $1.7100 mark by the end of the week.
In a longer term we stay bullish with a target of $1.7320, but the British currency clearly needs a driver to break above the $1.7200 resistance. We expect the cable to consolidate at the same $1.7190/7060 range at the beginning of the next week. The second part of the week will give the market another chance to break higher. There is a bunch of important releases on the agenda: BoE meeting minutes, retail sales report and Q2 UK GDP.