GBPUSD on Friday rose 0.65% to 1.29440. Week ending 2024-08-16 rose 1.52%. What’s going on.

Dear ,

As requested, let’s look at GBPUSD and the recent events that happened in the previous trading session.

GBPUSD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	0.65%	84.2 Pips
Week 2024-08-16	1.52%	193.6 Pips
August	0.71%	90.9 Pips

Upcoming key events for the new week (London Time)

  Wed 07:00 PM FOMC Meeting Minutes
  Thu 01:30 PM Initial Unemployment Insurance Claims
  Fri 03:00 PM Jackson Hole Symposium
  Fri 03:00 PM Federal Reserve Chair Jerome Powell speech (Jackson Hole Symposium)
  Fri 08:00 PM Bank of England Governor Andrew Bailey speech

What happened over the week

In the United States, the August flash estimate for the Michigan Index of Consumer Sentiment rose to 67.8 points from July’s 66.4 points, as reported by the University of Michigan. However, U.S. housing starts dropped significantly in July to 1.238 million from June’s 1.353 million, and building permits decreased to 1.396 million from the previous revised figure of 1.454 million, according to the Census Bureau. In contrast, U.S. Monthly Retail Trade saw a positive trend, increasing to 1% in July from 0% in June. The U.S. Initial Unemployment Insurance Claims for the week ending 10 August saw a decline to 227,000 from the previously revised figure of 234,000 as reported by the Department of Labor. Inflation data showed mixed signals with the U.S. CPI inflation rate slightly dropping to 2.9% in July from 3% in June, while the month-on-month CPI inflation rate increased to 0.2% from -0.1%. The U.S. Producer Price Index (PPI) for July showed a 12-month decline to 2.2%, down from the revised 2.7% in June.

In the United Kingdom, several key economic indicators pointed toward an improving retail sector but depicted mixed trends in other areas. July’s retail sales volumes rose by 0.5% month-on-month compared to a decline of -1.2% in June. On an annual basis, retail sales volumes increased by 1.4% compared to a previous annual decline of -0.3%. Excluding fuel, retail sales volumes experienced a substantial improvement, similarly rising by 1.4% year-on-year and 0.7% month-on-month, following contractions in June. On the inflation front, the U.K. CPI inflation rate annualized to 2.2% in July from 2% in June, while the month-on-month rate saw a decrease to -0.2% from 0.1%. Core CPI inflation dropped to 3.3% yearly in July from 3.5% in June. The U.K.’s GDP growth for Q2 declined to 0.6% from the previous 0.7%, with June showing zero growth after a 0.4% rise in May. The employment scene had mixed results; June’s Labour Force Survey showed employment change rising slightly to 24,000 from 19,000 in May, while the average earnings excluding bonuses dropped to 5.4% from 5.7%.

The positive retail sales and inflation figures coupled with mixed employment data in the U.K. provided some support to the British Pound. However, the decline in GDP growth and slower average earnings indicated underlying economic challenges. Conversely, in the U.S., robust retail trade data and lower initial unemployment claims suggested resilience, albeit contradicting with weaker housing starts and building permits data. Over the week, the mixed economic indicators from both countries influenced GBPUSD, which saw a rise of 0.65% on Friday to 1.29440 and a weekly gain of 1.52%. The contrasting data dynamics between improving U.K. consumer spending versus mixed U.S. housing and employment figures likely provided relative support for the GBP against the USD.

What can we expect from GBPUSD for the new week and what happened on Friday?

GBPUSD on Friday rose 0.65% to 1.29440. Price is above 9-Day EMA while Stochastic is rising in overbought zone. For the week ending 2024-08-16, the pair rose 1.52% or 193.6 pips higher.

Looking ahead on Monday, GBPUSD looks bullish as the pair ended higher after Friday trading session.

As for the new week, our technical outlook looks bullish, immediate upside resistance level at 1.30049 (WR1) with break above could target 1.30659 (WR2). On the downside, we are looking at week low of 1.27652 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.29460 would suggest bullish bias after recent positive movement.

For the month of August, GBPUSD is up by 0.71% or 90.9 pips higher.

Weekly key levels to watch out: