FMFX

GBPUSD New Week Outlook August 14 2011

Though cable managed to close the week above the key 1.6250 level, the pair maintains a bearish bias as long as price holds below 1.6500. At the open, price has the bullish momentum to move into the red sell zone that is marked by the 50% and 61.8% Fibonacci retracement levels of last week’s move to the downside.

The main target for bears will be the green buy zone. However, if price manages to break and hold below 1.6100 support then expect price to move to the 1.6000 major psychological level. From there, bears will have to prove themselves with a push towards the 1.5770 lows.

This week sees plenty of key economic data out of the UK that could make or break sterling this week. UK CPI is released Tuesday followed by the Bank of England meeting minutes release on Wednesday. UK retail sales will be contrasted to the US retail sales report of last week. Since both economies are heavily reliant on the consumer, investors will looks to see which economy is stronger relative to one another. There is also a lot of economic news from the US this week but I expect that UK fundamentals will ultimately dictate direction for the GBPUSD currency pair. Trade what you see!