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GBP/USD  posted strong  gains  last week, climbing 150 points. The  pair closed the week just under the 1.45 line. This week’s key events are the PMI reports. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

The Fed meeting minutes were surprisingly hawkish,  putting a June rate hike firmly on the table.  US unemployment numbers were within expectations and housing numbers beat the estimate. British CPI and Claimant Change missed their estimates, but the pound shrugged off these releases.

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

 GBP_USD Weekly Forecast-May 30-June3

 

  1. BRC Shop Price Index: Tuesday, 23:01. This event helps analysts track consumer inflation. The index continues to post declines, with the past two releases coming in at -1.7%. Will we see an improvement in the April report?
  2. Nationwide HPI: Wednesday, 6:00. This indicator provides a snapshot of the level of activity in the UK housing sector. The index slipped to 0.2% in April, its weakest gain since November 2015. The estimate for the May report stands at 0.3%.
  3. Manufacturing PMI: Wednesday, 8:30. This is the first key event of the week. The PMI slipped to 49.2 points in March, indicating contraction for the first time in three years. The estimate for April is 49.6 points.
  4. Net Lending to Individuals: Wednesday, 8:30. An increase in borrowing levels by consumers  often translates into higher consumer spending, a key driver of the economy. The indicator surged to GBP 9.3 billion in March, well above the forecast of GBP 5.0 billion. The estimate for the April report is GBP 5.3 billion.
  5. Construction PMI: Thursday, 8:30. Construction PMI dipped to 52.0 point in March, short of the forecast of 54.1 points. Little change is expected in the April report.
  6. Services PMI:  Friday, 8:30. The indicator dropped to 52.3 points in March, its weakest gain in over three years. This figure  was shy of  the forecast of 53.6. An identical reading of 52.3 points is expected in April.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.4350. The pair  quickly dropped to a low of 1.4332 and then reversed directions. The pair  climbed to a high of 1.4663, testing resistance at 1.4635 (discussed last week). GBP/USD closed the week at 1.4497.

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

Technical lines from top to bottom

 We begin with resistance at 1.4849.

1.4752 is next.

1.4635 has been a resistance line since early February. It held firm last week as GBP/USD posted strong gains.

1.4562 is a weak resistance line. It could see further action early in the week.

1.4413 was a cap in January. It is an immediate support line.

1.4297 is protecting the 1.43 line.

1.4148  is next.

1.4038 is the final support level for now.

I am  bearish on GBP/USD.

With the Fed weighing a rate hike in June, monetary divergence will favor the US dollar. As well, the Brexit referendum continues to cause uncertainty in the UK, which is weighing on cable.

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