GBP/USD: buyers lack energy
By Kira Iukhtenko
Traders are being rather indecisive about the further direction of the cable: the price fell to a new low below the 1.5900 mark on Wednesday, but retraced all the losses by the end of the week, recovering back above 1.6000. Market expectations for an earlier Bank of England rate hike declined as the UK economic recovery is showing signs of a slowdown.
As we see from the daily chart, the pair is trading in a clear-cut bearish channel and is dominated by the bearish widening Ichimoku Cloud. Note that the weekly Cloud has also turned negative. Weekly close above 1.6100 would open the way for another technical push higher to 1.6210, but we stay on a bearish side. Support lies at 1.6000, 1.5950 and 1.5870.
Next week will be rich for the potential market-movers. Pay special attention to the BOE meeting minutes release on Wednesday: traders will be scrutinizing the document for any hints on when the BOE plans to raise rates. Any changing in votes will set a clear direction for the cable. Don’t miss the retail sales on Thursday and the preliminary Q3 GDP on Friday. According to my forecasts, the data are to confirm a cooldown in the UK economic recovery and pull the sterling lower.