GBP/USD: outlook for July 25-31
GBP/USD spent most of the week between 1.3330 and 1.3070. On the one hand, the pound was supported by higher UK labor market data. However, British retail sales contracted and services PMI fell by almost 5 points.
All in all, the picture for sterling looks more negative than positive. The International Monetary Fund (IMF) has slashed its forecasts for the UK, while G20 draft communiqué stated that the recent ‘Brexit’ vote could collaborate with the global uncertainty. The Bank of England is expected to ease monetary policy in about 2 weeks. As the expectations of the US Federal Reserve’s rate hike start to revive, this won’t allow GBP/USD to achieve any sizeable growth. We expect the pound to stay under pressure.
Next week pay attention to the UK preliminary GDP on Wednesday, Gfk consumer confidence on Thursday and net lending to individuals on Friday. Support is at 1.3050 ahead of 1.2860 and 1.2500. Resistance lies at 1.3300 and 1.3500.