After a great rise and a breakout of important resistance, cable traders expect a very busy week – with employment and inflation figures, among others. Here’s an outlook for the British events, and an updated technical analysis for GBP/USD, now at higher ground. It seems that the rate hike will come sooner than later, despite the weak economy. Inflation, as seen in PPI, is high. Will consumer price rises accelerate as well? GBP/USD daily chart with support and resistance lines marked. Click to enlarge: Rightmove HPI: Monday, 00:00. This house price index has shown a significant drop in prices last month – 3%. This early report will probably drop again, but in a small scale. This will provided a choppy start to the week. RICS House Price Balance: Tuesday, 00:00. RICS takes a different approach to house prices – they measure the balance between areas that see a rise in prices and areas that see a fall. After going as low as -49%, the figure stabilized last month and rose to “only” -44%. It’s expected to tick up to -43% this time. Nationwide Consumer Confidence: Tuesday, 00:00. This important figure was delayed from last week. This survey of 1000 consumers disappointed in recent months and fell to 45 points, the lowest level since the beginning of 2009. A small recovery is predicted now, with the score rising to 51 points CPI: Tuesday, 9:30. Inflation is becoming a big concern in the UK. Consumer prices refuse to drop back to the 1-3% target. No change is expected this time, with CPI remaining at an annual level of 3.3%. The RPI (retail price index) is likely to tick up to 4.8% and Core CPI to ease to 2.6%. A jump to 3.7% or higher will increase the pressure for a rate hike, even before June – a date mentioned by some analysts. Employment Data: Wednesday, 9:30. The problem with raising the interest rate is that it will hurt the economy, and will cause another loss of jobs, which is already predicted due to austerity measures. Claimant Count Change indicates the change in the number of people claiming for unemployment benefits. A drop of 1400 people is expected in December, very similar to November’s figure. The unemployment rate for November is expected to remain unchanged at 7.9%, like in October. Also note the Average Earnings Index, expected to remain at 2.2%. A significant rise in unemployment will complicate the situation. CB Leading Index: Wednesday, 10:00. This composite index is slightly overshadowed by the employment data. Nevertheless, it still moves the pound. Last month saw a rise of 0.4%, and a slower rise is expected now. CBI Industrial Order Expectations: Thursday, 11:00. This indicator volume significantly improved last month, and rose to -3 points, still negative – still pointing to lower volume. Another improvement is expected now – to -1 points. A positive number will boost the pound. Retail Sales: Friday, 9:30. A major indicator will also close the week. After a small rise of 0.3% last month, a drop of 0.1% is expected now. This is the last figure before the raise in VAT in January 2011, so it may surprise with a rise as consumers might have readied themselves for this rise. Mortgage Approvals: Friday, 9:30. The preliminary figure for this important housing sector figure is expected to tick up to 49K, after a edging up to 48K last month. This solid figure is usually in a tight range. GBP/USD Technical Analysis After struggling under 1.5650 (mentioned last week), cable made a breakout and bounced off only below the 1.5910 line, to close at 1.5863. Looking up, 1.5910, which was a tough peak in December and also now, is the immediate and strong level of resistance. It’s followed by another important line – the round number of 1.60, which was the peak in August. Even higher, 1.6107, the swing high, is the next line of resistance after being a swing peak. Above, 1.63, the highest level in a year. The last line for now is the peak of 1.6450. Looking down, minor support is found at 1.5840, which was minor support in November. Below, 1.5720, is also a minor line, that worked in the past week and also beforehand. More important support is found at 1.5650, which was the top border of wide range that GBP/USD traded in until the recent breakout. It’s followed by 1.5480, which is a minor line. Further significant support appears at 1.5350, which was the bottom border or the wide range. 1.5230 capped the pair in the beginning of the summer, and is now has a different role. It’s followed by 1.5120, which already worked as support, and is a minor line now. Lower, 1.4950 was a stepping stone for the pound on the way up. It’s just under the round number of 1.50. The last line for now is 1.4770, which dates back in the spring. I am neutral on GBP/USD. The extremely high PPI shows that inflation is much stronger than feared. The unwanted rate hike might be inevitable. The break above 1.5650 is an important signal. On the other hand, the weakness in the economy and the austerity measures weigh on the pound. Sharp moves in both directions will continue. Further reading: For a broad view of all the week’s major events worldwide, read the USD outlook. For EUR/USD, check out the Euro/Dollar forecast. For the Japanese yen, read the USD/JPY forecast. For the Australian dollar (Aussie), check out the AUD to USD forecast. For the New Zealand dollar (kiwi), read the NZD forecast. For USD/CAD (loonie), check out the Canadian dollar. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam GBP USD ForecastMajors share Read Next AUD/USD Jan.17 -Aussie Lower on Negative Outlook Tamar Schoppik 12 years After a great rise and a breakout of important resistance, cable traders expect a very busy week - with employment and inflation figures, among others. Here's an outlook for the British events, and an updated technical analysis for GBP/USD, now at higher ground. It seems that the rate hike will come sooner than later, despite the weak economy. Inflation, as seen in PPI, is high. Will consumer price rises accelerate as well? GBP/USD daily chart with support and resistance lines marked. Click to enlarge: Rightmove HPI: Monday, 00:00. 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