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GBP/USD continued  its  sharp slide last week, losing  200 points. The pair closed at 1.5273. This week’s highlights are the PMI reports. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

The  dollar was broadly stronger last week, and had no trouble posting strong gains against the British pound. The US currency got a boost from strong core durables data out of the US and managed to weather weak GDP and employment numbers. In the UK, Second Estimate GDP came in at 0.3%, within expectations.

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

GBP_USD_Forecast.June1-5.

 

  1. Manufacturing PMI:  Monday, 8:30. Manufacturing PMI has remained above the 50-point level in 2015, pointing to ongoing construction. However. the index slipped to 51.9 points in April, well off the estimate of 54.6 points. The markets are expecting better news in the  May report, with an estimate of 52.7 points.
  2. Construction  PMI:  Tuesday, 8:30.  The PMI has lost ground in recent readings, and slipped to 54.2 points in the April release. This was well short of the forecast of 57.6 points. The markets are expecting the index to rebound in the May report, with an estimate of 5.1 points.
  3. Net Lending to Individuals: Tuesday, 8:30. Consumer credit levels are carefully monitored, as higher borrowing levels usually translate into stronger consumer spending, a key component of economic growth. The indicator has been moving upwards in 2015, and climbed to $3.1 billion pounds  in April, beating the estimate of $2.6 billion pounds. The markets are braced for a downturn in  the May report, with the estimate standing at 2.3 billion pounds.
  4. 10-year Bond Auction: Tuesday, Tentative. Ten-year bonds came in at 1.88% at the April auction, up from 1.68% a month earlier.
  5. BRC Shop Price Index:  Tuesday, 23:01. This indicator measures inflation in BRC shops. The indicator continues to post declines, and came in at -1.9% in April. Little change is expected in the upcoming release.
  6. Nationwide HPI: Wednesday, 6:00. This housing inflation indicator surprised the markets with an excellent gain of 1.0% in April, crushing the estimate of 0.2%. However, the markets are expecting a downturn in the May report, with an estimate of 0.3%. Will the indicator once again beat  the prediction?
  7. Services PMI: Wednesday, 8:30. This week’s PMI parade wraps up with Services PMI. The index improved to 59.5 points in April, beating the estimate of 58.6 points. This marked an 8-month high. Little changed is  expected in the May release.
  8. Official Bank Rate: Thursday, 11:00. The benchmark rate has remained at 0.50% since March 2009, and no change is expected in the June rate.
  9. Asset Purchase Facility: Thursday, 11:00. The BOE has maintained Asset Purchase Facility at 375 billion pounds since July 2012, and no move is expected in the upcoming announcement.
  10. Halifax HPI: Friday, 5th-9th. This housing inflation index posted a strong gain of 1.6% in the April reading,  well above the forecast of 0.3%. This points to stronger activity in the UK housing sector. However, the markets are bracing for a small gain of just 0.2% in the May release.
  11. Consumer Inflation Expectations: Friday, 8:30. Analysts rely on this indicator to help predict actual inflation data. The indicator, which is released each quarter,  has been softening. In the fourth quarter, the indicator slipped below the key 2% level in April, with a reading of 1.9%. Will the indicator improve in the Q1 report?

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5472, and quickly touched a high of 1.5473, as resistance  remained firm at 1.5485  (discussed last week).  It was all downhill  from there for the pair,  as the pair slipped to a low of  1.5209. The pair closed the week at 1.5273.

Live chart of GBP/USD: [do action=”tradingviews” pair=”GBPUSD” interval=”60″/]

Technical lines from top to bottom

With  the pound  posting sharp losses, we  begin at lower levels:

1.5690 marked the high point of the  current US dollar rally.

1.5590 worked as support late in 2014 and is a pivotal line in the current range.

1.5485 worked as support and later switched to resistance in April. It is closely followed by 1.5425 which had a role in the past.

1.5350 worked as resistance in January and was a stepping stone on the way up later on.

1.5270 capped the pair early in the year.

1.5127 is the next support line.

1.5008 is the last level before the  psychologically important  1.50 level.

1.4911 was an important line of support in mid-April.

1.4813 is the final support level for now. This line  marked the start of a pound rally in July 2013 that saw GBP/USD climb above 1.61.

I am  bearish on GBP/USD.

The US dollar is on an impressive roll against its major rivals, and could continue its upward movement this week. With analysts expecting better news in Q2 after a disappointing Q1, we could see the pair continue its downward move  towards the symbolic 1.50 level.

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