Key Economic Events (Oct. 17-21), GBP/USD: Can the Pound Hold the Bulls?
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Key economic events:
Monday (October 17, 21:45 GMT): New Zealand Consumer Price Index for the quarter.
Forecasts for Q3 CPI data are down from last quarter. to 1.5% versus 1.7%, respectively. At the same time, inflation expectations are also down from 7.3% to 6.6%.
Whether members of the Reserve Bank of New Zealand (RBNZ) will hike the interest rate to 75 basis points or raise it by 50 bps as previously agreed remains an open question.
Tuesday (October 18 2:00 GMT) – Chinese manufacturing data as the 20th Congress of the Chinese Communist Party opens.
Forecasts for quarterly GDP are positive: 3.5% growth is expected after a 2.6% drop last quarter. Consequently, the annual rate could show quite an increase from 0.4% to 3.3%!
Industrial production in China rose from 4.2% to 4.4% as capital investments moved up from 5.8% to 5.9%.
At the same time, the unemployment rate is expected to rise from 5.3% to 5.4%. Analysts also forecast a significant decline in annual retail sales from 5.4% to 3.1%.
Wednesday (October 19) is the U.K. inflation data.
Forecasts of a whopping 9.9% annual growth in annual inflation remain, as for core inflation, it is expected to rise from 6.3% to 6.4%.
The Bank of England has hinted that it could be a hike of 75 or 100 basis points higher than expected.
Canadian inflation data and the Canadian Consumer Price Index.
The Bank of Canada said that inflation is «too high. The central bank is likely to maintain its tough stance on rate hikes. However, if inflation is lower than expected, a softer rate hike is possible.
In terms of the annual consumer price index, analysts expect a slowdown from 5.8% to 5.7%.
Thursday (October 20) – Australian Labor Market Data. RBA October Meeting Minutes.
The RBA raised rates by 25bp, which was less than the market expected, but the RBA said that further decisions on the pace of rate hikes will depend on national inflation data.
Federal Bank of Philadelphia’s manufacturing index. U.S. initial jobless claims data. U.S. home sales data.
The Fed is projected to raise interest rates further despite the disappointing effects on the economy.
The housing outlook is mixed as U.S. mortgage rates are rising, even though home prices have fallen in the last two months. The decline in the MBA Mortgage Purchase Index illustrates that mortgage applications continue to decline this year.
Friday (October 21) – Japan Consumer Price Index.
Japan’s CPI outlook is positive as it gives hope for a 3% increase in the core national CPI and a 2.8 increase in the core CPI in the previous quarter.
As for monetary policy this year, the Bank of Japan does not intend to change it.
According to the Japan Times, “Bank of Japan Governor Haruhiko Kuroda said he will stick with monetary easing, signaling no change in stance after the yen continued its rapid decline last week and fell to a new 32-year low.”
GBP/USD
The GBP/USD pair is heading for a recovery on Monday, continuing a steady rise throughout the day. At the time of writing, it is trading at 1.1378 after falling below 1.0500 last week.
Source: TradingView
The pound is strengthening thanks to the repeal of the controversial tax law by the new UK government. The dollar, in turn, is under pressure from a decline in U.S. Treasury yields, as well as pending Fed decisions and other data on the national economy.
At the same time, the pound could lose its advantage next week on the background of higher inflation figures.
The 100 and 200 SMAs are still in a downtrend and stochastic is still far from the overbought zone. The next support levels are at 1.1215-1.1210. If the level of 1.1200 will be broken through, the trend will change to bearish.
On the other hand, if the resistance level of 1.1380 is broken through, the next step will be the level of 1.1400, and then 1.1500.
The GBP/USD pair’s behavior will be interesting after the publication of data from major U.S. companies this week. Netflix, Tesla, IBM, Goldman Sachs and Bank of America will release their financial reports. As a result, GBP/USD may shift positions, which will allow traders to make some risky bets.
How to learn trade major currency pairs, so Forex on GBP/USD pair’s, check our education guide.