Last Friday, GBP/USD enjoyed the weak Non-Farm Payrolls in the US to rise to new levels. Since then, it has traded in an almost perfect range – from 1.5080 to 1.5240. This 160 pip range saw three tops and three bottom throughout the week, without breaking out. But the situation doesn’t look good for the Pound:

Recent economic data is mostly negative. British Services PMI disappointed with a drop to 54.4 points, worse than expected. Halifax HPI, which shows the change in house prices, fell by 0.6% instead of rising by the same scale. Manufacturing Production fell short of expectations as it rose by only 0.3%, and last month’s drop was revised – 0.8% instead of 0.8% – double.

But the biggest disappointment came from interest rate issues. First, the Bank of England didn’t raise the rates. While this was the consensus, this came after we saw that one member voted to raise the rates last month – Andrew Sentance’s vote came on rising inflation that missed the government’s target month by month.

The decision not to raise the rates was later backed with the PPI figures – producer prices dropped last month by 0.2% when expectations stood on a rise of 0.1%. So, maybe the inflationary pressures aren’t too strong?

Similar to the Euro, it seems that the British Pound mostly enjoyed the US dollar’s weakness rather than its own strength. A drop will find immediate support at 1.5050, followed by 1.4870 and 1.4780. A breakout to the upside will meet resistance at 1.5350, followed by 1.5530 and 1.5833.

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In the US, Unemployment Claims, weekly report that measure the number of individuals who filed for unemployment insurance for the first time during the past week; droops down to 461K from 472K and affects the labor-market conditions;

Later in the US, Crude Oil Inventories a weekly US indicator that affects the loonie due to Canada’s sizable energy sector; and measures the change in the number of oil barrels held in inventory. It influences the price of petroleum products which affects inflation but also impacts growth due to produce goods;

In Canada, New Housing Price Index (NHPI); monthly report that measures the change in the selling price of new homes; is about to rise by 0.5% and attract investors and spur industry activity;

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, European Central Bank (ECB); Press Conference with 2 parts – first a prepared statement is read, then the conference is open to press questions that create heavy market volatility. It covers in detail the factors that affected the most recent interest rate and other policy decisions,

Later in Europe, European Central Bank (ECB); Minimum Bid Rate that measures the Interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system is on 1% and short term interest rates are the paramount factor in currency valuation – traders look at most other indicators.

Finally in Europe, A decrease of 1% is anticipated now in the German Industrial Production monthly report, that measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities; and affects the is correlated with consumer conditions such as employment levels and earnings;

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

Moving on to Great Britain, House Price Index (HPI), Halifax Bank of Scotland (HBOS); an influential rise is anticipated from -0.4% to 0.6%. It’s a leading indicator because rising house prices attract investors and spur industry activity;

More in Great Britain, Manufacturing Production monthly report that measures the total inflation-adjusted value of output produced by manufacturers; shows a rise from -0.4% to 0.6%. It’s correlated with consumer conditions such as employment levels and earnings;

Finally in Great Britain, Official Bank Rate at the Bank of England (BOE), Monetary Policy Committee (MPC); stays on 5%. When there is a change in rates the MPC will also issue a statement and be overshadowed by the MPC Rate Statement which is focused on the future. The short term interest rates are the paramount factor in currency valuation.

Read more about the Pound in the GBP/USD forecast.

In Australia, Employment Change a monthly report that measures the number of employed people during the previous month; is about to droop down from 26.9K to 15.3K and as job creation is an important indicator its accounts for a majority economic activity;

Later in Australia, Unemployment Rate shows stability by 5.2%, monthly report that measures the percentage of unemployed that actively seeking employment during the previous month. It’s an important signal of overall economic health.

For more on the Aussie, read the AUD/USD forecast.

That’s it for today. Happy forex trading!

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A very interesting rate decision expects us in Britain, with inflation becoming a threat. There are many more indicators in this busy week. Here’s an outlook for the British events, and an updated technical analysis for GBP/USD.

GBP/USD daily graph with support and resistance lines on it. Click to enlarge:

The pressure for a rate hike now comes from the inside as well, with Andrew Sentance voting for it last time. Will there be a rate hike? Or are the fears of a double dip recession limiting the chances? There are lots of other indicators on the way. Let’s start:

1. Halifax HPI: Publication time unknown at the moment. This index is based on rather accurate data, as it’s based on internal data from HBOS. According to this indicator, an initial dip in prices seen 4 months ago was not accidental. Despite an immediate correction three months ago, prices disappointed with two consecutive months of drops. Last month’s drop of 0.4% will probably be followed by a similar dip.
2. Services PMI: Published on Monday at 8:30 GMT. After last week’s manufacturing PMI, we’ll now hear news from the services sector. Although the score is below the high levels of 58 points, it has been stable and positive in recent months – around 55 points. A small drop is predicted now. Actual: 54.4.
3. Manufacturing Production: Published on Tuesday at 8:30 GMT. This indicator always rocks the Pound. After two strong months, production dipped last month by 0.4%. A small correction is expected this time. Note that manufacturing is around 80% of industrial production, which is released at the same time but has less impact.
4. Nationwide Consumer Confidence: Published on Tuesday at 23:00 GMT. This important barometer returns to its normal release time, a day and a half before the rate decision. After reaching a peak of 81 points, this survey of 1000 consumers fell gradually, and now stands at 65. Another drop is expected now.
5. Rate decision: Published on Thursday at 11:00 GMT. Mervyn King is facing growing pressure for raising the rates. The new Prime Minister David Cameron has urged the central bank to tackle inflation. Also one of King’s colleagues, Andrew Sentance, voted for a rate hike last time. Nevertheless, King is expected to leave the Official Cash Rate unchanged once again at 0.5%. The wording of the MPC Rate Statement will be watched very carefully this time. Will they finally hint a rate hike?
6. NIESR GDP Estimate: Published on Thursday at 14:00 GMT. This independent institute is usually more accurate in forecasting the GDP than other economists, and they also release their estimates on a monthly basis. According to NIESR, the British economy is growing in recent months, at a rate of about 0.6% per quarter. This release relates to the three months ending in June – the full second quarter. It will be very interesting to see if growth continues, or if the European problems hurt Britain as well.
7. Trade Balance: Published on Friday at 8:30 GMT. After the deficit fell to 6.3 billion pounds, it rose above 7 billion and disappointed the Pound, which was especially hurt two months ago. A small deficit than 7.3 billion seen last month is expected now.
8. PPI: Published on Friday at 8:30 GMT, together with the trade balance. While being more volatile than the CPI, producer prices have also exceeded expectations, showing that inflation is on the rise also here. Following last month’s drop of 0.6% in PPI Input (the main figure), a rise is expected now. Also PPI Output is expected to rise and boost the Pound.

GBP/USD Technical Analysis

In the US, Core Retail Sales and Retail Sales are expected to show a decline in the US economy; Core Retail Sales, from 4.0% to 1.0% and Retail Sales, from 0.4% to 0.2%.

Later in the US, Preliminary UoM Consumer Sentiment is climbing up again to 74.7 points which is 1.1 points higher than the previous month. This continuous rise will have a positive effect on the market. More from UoM , The Preliminary UoM Inflation Expectations is likely to remain around 3.2%.

More in the US, Business Inventories released monthly, measuring the change in the total value of goods held in inventory by manufacturers, wholesalers, and retailers is expected to rise by 0.2% reaching 0.6%.

In Canada, Capacity Utilization Rate is expected to continue its rise reaching 73.4% which may indicate rising inflation rates.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, German Wholesale Price Index is predicted to drop from 1.7% to 0.3% although forecast in previous months also tended to be lower than the actual result.

Also in Europe, French CPI is foreseen a decrease 0.1% from 0.3% in May.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Great Britain, Manufacturing Production is expected to decrease by 1.7% from 2.3% in May indicating lower inflation rates.

More in Great Britain, Producer Price Index Input is foreseen to plunge from 0.6% to -0.9% as well as UK PPI Output suspected to decrease by 0.8% from 1.4% in May.

Finally in Britain, Consumer Inflation Expectation will probably remain unchanged reaching 2.5% and Industrial Production is intended to rise by 0.3% to attain 0.5%.

Read more about the Pound in the GBP/USD forecast.

That’s it for today. Happy forex trading!

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GBP/USD chart with support and resistance lines on it. Click to enlarge:

The Pound enjoyed the failure of the Prudential -AIG Asia deal. This deal would have sent billions of pounds overseas, and its failure strengthened the Pound. That wasn’t enough to hold the Pound after Friday’s Non-Farm Payrolls though. Let’s see the British events:

1. BRC Retail Sales Monitor: Published on Monday at 23:00 GMT (midnight UK). This figure is a great indicator for the official retail sales release. The British Retail Consortium showed a drop of 2.3% in the retailers that belong to its organization. This came after two months of neat rises. Another drop is predicted this time.
2. Nationwide Consumer Confidence: Published on Tuesday at 23:00 GMT. This survey of 1,000 consumers is a highly regarded barometer for the mood of consumers and of MPC members that meet later in the week. After steadily climbing to 81, this indicator dropped and now stands on 74 points. This is the first survey for the new government and also the first one after the escalation of the European troubles. Economists expected a rise to 78 points, but given the worries, a drop under 70 won’t be very surprising.
3. Trade Balance: Published on Wednesday at 8:30 GMT. After making a surprise drop two months ago and boosting the British Pound, the trade deficit jumped once again to 7.5 billion pounds, weakening the currency. It’s expected to squeeze down to 7 billion this time.
4. Rate decision: Published on Thursday at 11:00 GMT. The BoE is trapped between the desire to stimulate the economy by leaving the interest rate unchanged, and by the rising inflation. Mervyn King dismissed the rising inflation and said it’s only oil prices, but the new Prime Minister, David Cameron, doesn’t buy this, and made it clear that he wants the issue to be tackled. The consensus is for an unchanged Official Bank Rate – at 0.5%. If there isn’t a rate hike, traders will watch the MPC Rate Statement – if they express worries about inflation, the Pound will rise. If they focus on economic troubles, it will weaken.
5. Manufacturing Production: Published on Friday at 8:30 GMT. This major indicator always rocks the Pound. Last month’s release was a big surprise – output grew by 2.3%, far better than expected.The forecast for this release is more modest – 0.6% growth. Note that manufacturing is part of the overall industrial production, which is predicted to rise by 0.5% after a 2% rise last time. Manufacturing is more closely watched.
6. PPI: Published on Friday at 8:30 GMT. Following a leap of 3.8% in producer prices two months ago (3.8%), prices grew by only 0.6% last month, and they;re expected to drop by 0.1% this time, showing that inflation is still under control, at least with the PPI Input figure. The complementary number, PPI Output, is expected to rise by 0.6% after rising by 1.4% last time.
7. NIESR GDP Estimate: Published on Friday at 14:00 GMT. Last but not least, the NIESR institute usually provides accurate estimations about the GDP, and they release it on a monthly basis. ast month’s figure was positive – it showed a growth rate of 0.5% in the three months ending in April. A weaker growth rate is expected now, when May is added and February omitted from the calculation.

GBP/USD Technical Analysis

After some range trading between 1.44 and 1.4610, the Pound made a breakout and reached 1.4770, just 10 pips below the 1.4780 resistance line. Friday’s mess sent the pair back down to 1.4450.

Note that many lines have changed since last week’s outlook. The pair is bound by 1.44 and 1.4610 once again. Both lines aren’t very strong.

Looking down below 1.44, the next line is the year-to-date low of 1.4230. This was also a line of support last year. Below, 1.4130 was a swing low and now provides minor support.

Even lower, 1.38 is a strong line, working as a support line at the beginning of 2009. It’s followed by 1.3660, and by the ultimate multi-decade support line of 1.35.

Looking up above 11.4610, strong resistance is found at 1.4780. This is the line that the Pound collapsed to a few months ago, and it was tested successfully just this week.

A break above this line will send the pair to 1.5065, followed by 1.5130, which was a strong support line. There are more resistance lines higher above, but they are too far now.

I am neutral on the GBP/USD.

On one hand, the British economy is still growing slowly and it suffers from the debt issues in continental Europe. But on the other hand, rising inflation can trigger a rate hike, that will probably come sooner than later.

Further reading:

• For a broad view of all the week’s major events worldwide, read the forex weekly outlook.
• For the Euro/Dollar, look into the EUR USD Forecast.
• For the Australian dollar (Aussie), check out the AUD/USD forecast.
• For the New Zealand dollar (kiwi), read the NZD/USD forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.

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In the US, IBD/TIPP Economic Optimism is expected to rise in 0.5 points bringing more optimism to the market after Non -Farm Employment Change showed a rise of 35000 in the number of employed people in the market.

Later in the US, Wholesale Inventories released monthly is foreseen a drop of 0.1%   from 0.6% in the previous month which is another good sign for the market’s activity since a decline in Wholesale Inventories indicates that retailers are buying more goods to meet strong or rising demand.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe German Final CPI released monthly, measuring the average price of a fixed market basket of goods and services purchased by consumers, and therefore give an overall read of Inflationary pressures is expected to remain of  -0.1%  indicating deflation and the German Wholesale Price Index is also heading for a drop from 1.3% to 0.3% following the same tendency.

More in Europe, Switzerland’s SECO Consumer Climate is expected to edge up by 9 points from -7 in the previous month indicating a good business climate and a favorable insight on future consumer spending.

Finally in Europe, Deutsche Bundesbank President Axel Weber, delivers a speech about exit strategies in financial politics at the CER-ETH/KOF lecture, in Zurich. And will have impact on Eurozone’s key interest rates and future monetary policy;

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Great Britain, Manufacturing Production is predicted to drop by 1% from the rise experienced in the previous month, indicating poor industrial production. 

More in Great Britain, Industrial Production is also expected to fall to 0.3% from 1.0% in the previous month indicating market deceleration.

Read more about the Pound in the GBP/USD forecast.

That’s it for today. Happy forex trading!

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GBP/USD chart with support and resistance lines marked. Click to enlarge:

Apart from the British elections, the British Pound also suffered from the European troubles. They began with the rumor that Spain would seek aid and turned into an avalanche. Now, the British events will take over:

1. Rate decision: Published on Monday at 11:00 GMT. This decision was delayed due to the elections and provides a strong start to the week. There are talks that Mervyn King will step up his measures, now that the elections are behind us, as the nflation is rising. While the chance of raising the Official Bank Rate is very small, a different rate statement regarding future policy could boost the Pound, although this King wants a weak Pound
2. BRC Retail Sales Monitor: Published on Monday at 23:00 GMT (midnight UK). This “mini retail sales” release, provided by the British Retail Consortium, gives a good picture towards the official figure that will be published later on. In the past two months, the volume of sales grew nicely, including a 4.4% leap last month. A smaller rise is predicted this time.
3. Manufacturing Production: Published on Tuesday at 8:30 GMT. The British industry enjoyed a rise of 1.3% in its manufacturing production last month, double the expectations. Manufacturing is 80% of all the industrial production and overshadows it. Note that this figure is volatile, and the impact is quite strong. A rise of 0.3% is expected now.
4. NIESR GDP Estimate: Published on Tuesday at 14:00 GMT. TheNational Institute of Economic and Social Research usually provides a good and up to date estimate of the economy’s performance. Last time, it was inline with economists expectations for a 0.4% rise in Q4, but the actual growth was weaker. The figure released now relates to the three months ending in April.
5. Employment data: Published on Wednesday at 8:30 GMT. Claimant Count Change represents the change in the number of people claiming unemployment related benefits. In the past two months, this number dropped significantly – over 32,000 people every month – this is excellent. A smaller drop is predicted this time. The unemployment rate jumped to 8% and it’s expected to improve this time. Also note the Average Earnings Index figure that rose by 2.3% last month – quite strong. A drop of 20,000 unemployed people is expected now.
6. BOE Inflation Report: Begins on Wednesday at 9:30 GMT. Two days after the rate decision, Mervyn King has another opportunity to impact currency trading. This report doesn’t cover only inflation – it also contains updated economic forecasts and could hint about future rate policy. King will hold a press conference to accompany the release.
7. Trade Balance: Published on Thursday at 8:30 GMT. The British trade deficit squeezed last month to 6.2 billion, better than expected. This helped the Pound at that time, and will probably help it this time as well, if the deficit is below 6 billion, but expectations stand on 6.5 billion.
8. CB Leading Index: Published on Friday at 9:00 GMT. This index is composed of 7 economic indicators – most of them already released. Nevertheless, this figure from the Conference Board tends to move the Pound. In the past few months, this index made steady rises. A small rise is predicted this time.

GBP/USD Technical Analysis

The Pound began the week with some range trading between 1.5120 and 1.5350. After conceding the 1.5120 line, GBP/USD dropped quickly below the previous 2010 low of 1.4780 and bottomed out at 1.4477 before closing at 1.4798.

This exciting week forced adding lower support lines on top of last week’s outlook. After closing above 1.4780, the Pound’s range is between 1.4780 (a strong support line) and 1.4975 (a minor resistance line).

Looking up, the serious line above is 1.5120. This worked as a strong support line and now works as resistance. Higher, 1.5350 is less strong than it used to be. The line above is 1.5520, but that’s far now.

Below, 1.4400 is a line we spoke about before, and was tested with the collapse in the past week. This serves as a strong resistance line. Under this line, 1.4130, which was a low point in March 2009 is another line of support.

Even lower, 1.3850, 1.3670 and 1.35 are below, but these lines are too far. At least now…

I am bearish on GBP/USD.

The hung parliament and the European troubles are stronger than the improving British economy, especially the employment data which will be updated the week. The Pound will probably continue suffering until these issues are resolved.

Further reading:

• For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
• For the Euro, read the EUR USD Forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

The Canadian dollar doesn’t receive any figures today, but it will still draw attention. USD/CAD parity is here for the first time in 20 months, and it seems that it’s here to stay. OK, let’s start the review:

Australia provides a strong start to the day with the employment figures. Employment Change is predicted to show a gain of 20,200 jobs while the Unemployment Rate will probably remain unchanged at 5.3%. This might push the Aussie towards important 0.9327 resistance line.

For more on the Aussie, read the AUD/USD forecast.

A day after the rate decision, Japan’s BOJ Monthly Report is released and can shake the yen. This will give another view on the economy. Also note the Economy Watchers Sentiment.

In Switzerland, the Unemployment Rate is predicted to remain unchanged at 4.1%.

British Manufacturing Production will probably rise by 0.7% after dropping by 0.9% last month. This will be a prelude to the main event.

The last British rate decision before the elections isn’t expected to bring any changes: the Official Bank Rate is expected to remain unchanged at 0.5%. Also the Quantitative Easing program will probably not receive new funds, and will remain on 200 billion pounds.

It will be interesting to see if Mervyn King will release any negative statements about the economy in the MPC Rate Statement – this might shake the volatile pound.

There’s still one more British figure – the NIESR GDP Estimate which is usually an accurate and fresh indicator for the government’s figure. It showed a growth rate of 0.3% for the 3 months that ended in February, and will now show the first quarter in full.

For more on the Pound, read the GBP/USD forecast.

In Europe, two figures are due before the rate decision: Retail Sales, which fell by 0.3% last month, will probably remain unchanged this time. In Germany, that Industrial Production is predicted to rise by 0.7%. Factory Orders were better than expected, so we can see a positive surprise here as well.

Jean-Claude Trichet isn’t expected to move the European Minimum Bid Rate from 1%. With a stagnant economy, there’s no reason for a move. It will be interesting to hear his comments about Greece and other debt laden countries in the ECB Press Conference.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In the US, Unemployment Claims are expected to continue dropping, indicating a real improvement in the economy. A drop from 439K to 433K is expected.

A day after Ben Bernanke’s speech, we have a few more speeches from FOMC members: Elizabeth Duke, Daniel Tarullo and Donald Kohn will all make public appearances.

That’s it for today. Happy forex trading!

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GBP/USD graph with support and resistance lines on it. Click to enlarge:

Together with the rise of GBP/USD, also the GBP/JPY cross went up and broke an important resistance line. We could see this popular cross continue going north. OK, let’s see the British events. The technical analysis will follow:

1. Halifax HPI: Publication time unknown at the moment. Delayed from last week. This house inflation indicator is important due to its wide array of data – internal data from the HBOS bank. After a disappointing drop of 1.5% last month, a rise of 0.6% is predicted this time.
2. Construction PMI: Published on Tuesday at 8:30 GMT. Te second housing figure this week comes from purchasing managers in the construction sector. 170 managers in this sector have continued to show pessimism and left the index under 50 – meaning economic contraction. The score is predicted to rise from 48.5 to 48.8 points this time.
3. Nationwide Consumer Confidence: Published on Tuesday at 23:00 GMT. This important survey by the Nationwide Building Society was quite good last time – it rose to 80 points – the highest in two years. It shows optimism from Brits. It’s now predicted to edge up to 81 points.
4. Services PMI: Published on Wednesday at 8:30 GMT. The services sector is doing quite well – purchasing managers have been expecting economic expansion in the past 10 months. After the leap to 58.4 points last month, this indicator is predicted to tick down to 58.2 points.
5. Manufacturing Production: Published on Thursday at 8:30 GMT. This important indicator dropped by 0.9% last month, the first drop in in 5 months hurting the Pound. A correction is predicted this time – a rise of 0.7%. Note that manufacturing is 80% is of industrial production which is published at the same time, and is expected to rise by 0.5%.
6. Rate decision: Published on Thursday at 11:45 GMT. Mervyn King wants a weaker pound, and talked about an option to re-open the Quantitative Easing program, after the money ran out of it. But, he hasn’t done it yet. This Asset Purchase Facility is expected to remain unchanged, and so is the interest rate, that stands at 0.5%. In the MPC rate statement, the bank might relate to the situation of economy, that is in an election year.
7. NIESR GDP Estimate: Published on Thursday at 14:00 GMT. This unofficial estimate proves correct in many cases. This release will complete the first quarter of 2010 and is expected to show a small rise in GDP. NIESR showed a rise of 0.3% last time – it reflected the three months that ended at February.
8. PPI: Published on Friday at 8:30 GMT. British producer prices leaped for one month and then calmed down last time – PPI Input rose by 0.1%. This time, a rise of 1.2% is predicted in this indicator. PPI Output is expected to rise by 0.4%, similar to last month. As with CPI, British inflation didn’t pick up.

GBP/USD Technical Analysis

The Pound began the week by rising towards 1.50 and resting there. It later rose to the resistance line of 1.5110 and stayed there for some time before rising. The peak was at 1.53, a safe distance from the all-important 1.5350 resistance line.

The lines hardly changed since last week’s outlook. The Pound now trades between 1.5110, a minor support line, and 1.5350, which provides strong resistance.

Above, 1.5530 is another minor resistance line that worked recently, followed by 1.5833 which is a very strong line resistance.

Looking down, 1.50, the round number, provides some support. The strongest support line appears at 1.4780, the year-to-date low, and also a support line last year.

If 1.4780 is broken, the next line of support appears only at 1.44. This probably won’t be approached this week.

I remain bearish on GBP/USD.

The uncertainty towards the elections and the failure to enjoy the dollar’s weakness to rise above 1.5350 are a bearish sign for me.

Further reading:

• For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
• For the Euro, read the EUR USD Forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

GBP/USD graph with support and resistance lines on it. Click to enlarge:

The rate decision that we saw this week wasn’t different than previous ones, but the chance of renewing the Quantitative Easing program (hurting the Pound) still exists. Let’s start:

1. Kate Barker talks: Starts speaking on Monday at 13:00 GMT. Barker is about to finish her job as a voting member of the MPC in May. This might make her words, in a speech in London, more loose. The last rate decision didn’t contain any big surprises, but she might indicate something about the future.
2. BRC Retail Sales Monitor: Published on Tuesday at midnight GMT. The British Retail Consortium releases this unofficial retail sales release before the government, but it isn’t always accurate.  After four months of expansion, sales volume fell by 0.7% in the previous month. A small rise is expected this time.
3. RICS House Price Balance: Published on Tuesday at midnight GMT and overshadowed by the BRC release. The balance between areas reporting house price rises and ones showing a drop has been OK. After this indicator reached a peak at 45%, it fell back to 30%. It’s now expected to rise again – from 32% to 36%.
4. Trade Balance: Published on Tuesday at 9:30 GMT. The British deficit rose to 7.3 billion last month, and it’s now expected to drop back to to 6.9. A deficit in trade balance is normal for Britain.
5. Manufacturing Production: Published on Wednesday at 9:30 GMT. This event will probably have the strongest immediate impact on the Pound. Production surprised with a nice rise of 0.9% last month, and is now predicted to get back to slower growth – 0.3%. Note that the Industrial Production figure contains manufacturing (80%) and other sectors, but the manufacturing number is eyed.
6. NIESR GDP Estimate: Published on Wednesday at 15:00 GMT. The NIESR independent institute is known for its accuracy. They release a monthly estimate that relates to the three months that just ended. Their last projection showed growth at a scale of 0.4%. A similar number is expected this time.
7. Consumer Inflation Expectations: Published on Thursday at 9:30 GMT. The BOE releases a quarterly figure that shows what consumers expect. Prices have risen in the UK, but Mervyn King has a tendency to dismiss it. Well, now we’ll see what consumers think. In the previous three quarters, expectations were identical – 2.4%.
8. Spencer Dale talks: Starts speaking on Friday at 10:00 GMT. As chief economist of the BOE, Dale’s words have an impact on the Pound. He’ll talk in front of Cambridge students close to the close of the markets and could shake the Pound.

GBP/USD Technical Analysis

The Pound began the week with a big collapse: it lost 1.50 and dropped quickly to 1.4780, were it bounced back. The close at 1.5133 isn’t too bad considering the bad start, but it still reflects a third week of lower closes.

GBP/USD is currently bound by two minor lines: 1.50 from below, being a round number, and this week’s peak of 1.5167 – a line that didn’t appear in last week’s outlook.

Looking up, 1.5350 is a very strong resistance line. The break of this line (when it served as support) sent GBP/USD tumbling down. Higher, 1.5833 is the next important line. GBP/USD wasn’t above it for many weeks now.

Looking down, 1.4780 provides strong support. It worked as a support and resistance line in the spring of 2009, and held the Pound from falling further just now.

Even lower, 1.44 is the next significant line of support, working as such during May 2009. A break of 1.4780 is needed for further downside towards this line.

I remain bearish on GBP/USD.

Worries about a political stalemate, debt and unemployment continue to weigh on the Pound. The loss of important technical levels reflects the situation.

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Further reading:

• For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
• For the Euro, read the EUR USD Forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.