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The British pound  showed little change last week, as  GBP/USD closed at the 1.49 line. This week’s highlights  are  Services PMI  and Manufacturing Production. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

British PMIs were mixed last week, while Current Account fell short of expectations. In the US, the week started with strong numbers, led by  an excellent consumer confidence report  and  strong unemployment  claims. However, the week  ended with a very disappointing jobs report, raising speculation that the Fed may have to delay a rate hike.

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


GBP_USD_Forecast.Apr 6-10

  1. Halifax HPI: Tuesday, 7th-8th. This index provides a snapshot of the strength of the UK housing market. The indicator posted a decline of 0.3% in February, its first decline in four months.
  2. Services PMI: Tuesday, 9:30. This is the first key event of the week. The index continues to trade above the 50-point level, indicative of expansion in the services sector. Little change is expected in the March report, with an indicator of 57.1 points.
  3. BRC Shop Price Index: Wednesday, 00:01. This indicator measure inflation in BRC shops, and provides analysts with useful data to track UK inflation levels. The index continues to post declines, and weakened to -1.7% in the  February release.
  4. BOE Credit Conditions Survey:  Wednesday, 9:30. The BOE releases this report on a quarterly basis. Credit conditions are closely monitored by the markets, as an increase in credit levels usually translates into increased spending.
  5. RICS House Price Balance: Thursday, 00:01. This minor event helps gauge activity in the housing sector. The indicator jumped to 14% in February, well above the forecast of 6%. More of the same is expected in the March report, with an estimate of 15%.
  6. Trade Balance: Thursday, 9:30. Trade Balance is closely connected to currency demand, as foreigners must by pounds in order to purchase British exports. The trade deficit narrowed to GBP- 8.4 billion in January, much lower than the estimate of GBP -9.7 billion. The forecast for the February report stands at GBP -9.1 billion.
  7. Official Bank Rate: Thursday, 12:00. No changes are anticipated from the BOE, which is expected to maintain the benchmark rate at 0.50% and asset purchase facility at 375 billion pounds.
  8. Manufacturing Production: Friday, 9:30. An unexpected reading from this key event could have a significant impact on the direction of GBP/USD. The indicator disappointed in January, with  a decline of 0.5%. This was well off the estimate of +0.2%. The markets are expecting  a strong turnaround in February, with the estimate standing at 0.4%.
  9. NIESR GDP Estimate: Thursday, 15:00. This monthly indicator helps analysts track GDP, which is only released on a quarterly basis. The indicator has been steady, and  posted  a gain of 0.6% in the February reading.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.4883 and dropped to 1.4740. The pair then reversed  directions  and touched a high of 1.4945, stopping short of  resistance at 1.5008  (discussed last week). The pair closed the week at 1.4856.

Live chart of GBP/USD:

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Technical lines from top to bottom

1.5296 has provided resistance since the first week in March.

1.5114 remains a strong resistance line.

1.5008  held firm for the second straight week, as the pair pushed higher late in the  week.

1.4813 was tested during the week  and remains an immediate support level.  It marked the start of a pound rally in July 2013 that saw GBP/USD climb above 1.61.

1.4621 was an important cap in August 2001.

1.4521 is the next support line.

The final support level for now is 1.4346, which has remained intact since June 2010.

I am  bearish on GBP/USD.

The dollar managed to hold its own against the pound despite a dismal job report, demonstrating that dollar sentiment remains strong. If the US releases have a better week, we could see the pound lose ground.

In this week’s podcast, we feature an Interview with FXStreet President Francesc Riverola on the industry, volatility and more

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