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GBP/USD  moved upwards this week, closing just shy of the 1.60 level, at 1.5996. The upcoming week is quite busy, with nine releases. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD.

Updates: GBP/USD climbed  above the 1.60 level, trading at 1.6040. U.K. Manufacturing PMI  rose to 52.1, well above the market  forecast, and hitting its  highest level since May 2011. Housing Equity Withdrawal, released quarterly,  disappointed, dropping to -8.5B. Construction PMI rose to 56.7, its best reading since July 2010. The Shop Price Index rose 1.5%. HPI jumped 2.2%, the highest increase since June 2009. Services PMI rose to 55.3, exceeding the market forecast of 53.5. GBP/USD  is down  sharply, trading at 1.5873. The trigger for the plunge was as the release of the March FOMC Meeting Minutes, which  indicated that the Fed intends to refrain from further quantitative easing unless the rate of growth falters or inflation drops below the central bank’s 2% targeted rate. GBP/USD continues to sag, trading at 1.5829. Industrial Production rose 0.4%, matching the market forecast. As expected, Asset Purchase Facility came in at 325B. The cenrtal bank kept the  Official Bank  Rate unchanged, at 0.50%.

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

  1. Halifax HPI: Publication time tentative. This housing inflation indicator was down sharply in March, falling to -0.5%. The forecast for April is also weak,   at -0.3%.
  2. Manufacturing PMI: Monday, 8:30. This diffusion index is base on a survey of purchasing managers in the manufacturing sector. The indicator  recorded a reading of 51.2 in March, and little change is forecast for this month.
  3. Construction PMI: Tuesday, 8:30. This diffusion index is based on a survey of purchasing managers in the construction industry. The index jumped to 54.3 in March,  an eleven-month high.  The market forecast is for a similar reading in April.
  4. BRC Shop Price Index: Tuesday, 23:01. This inflation index has been on a downward trend for the past five consecutive months. It posted a reading of 1.2% in March. Will the indicator continue to drop this month?
  5. Services PMI: Wednesday, 8:30. This diffusion index is based on a survey of purchasing managers in the service sector. The index was down slightly last month, at 53.8. The markets are not forecasting any substantial change in April.
  6. Manufacturing Production: Thursday, 8:30. Manufacturing Production was a flat 0.1% in March, indicating very modest activity in the manufacturing sector. The market prediction for April calls for little change.
  7. Asset Purchase Facility: Thursday, 11:00. This indicator measures the amount of funds  that the central bank  uses to purchase assets in the open market. The figures have been steady for the past two months at 325B, and no change is forecast for  April.
  8. Official Bank Rate: Thursday, 11:00. The central bank has held interest rates at 0.50%, and no change is expected in April.
  9. NIESR GDP Estimate: Thursday, 14:00. This monthly GDP  estimate    recorded a modest increase of 0.1%.  A  higher  reading in April would indicate economic growth and could help the pound.

*All times are GMT

GBP/USD Technical Analysis

GBP/USD  opened the week at 1.5878. The pair dropped to a low of 1.5802.  GBP then climbed as high as 1.6037, as the resistance line of 1.6065 (discussed last week) continued to hold firm. The pair ended the week just shy of the 1.60  line, at 1.5996.

Technical levels from top to bottom

We begin with the strong resistance level of 1.6470. Below, there is resistance at 1.6356. This is followed by the resistance line of 1.6265. Next, 1.6132 has provided strong resistance since November 2011.  The next  line of resistance  is at 1.6065. Next, the psychologically important line of 1.60  was breached this week, and looks to fall if the pound continues  to push upwards. This is followed by 1.5923, which  is  now  providing weak support to the pair.  Close by is the support level of 1.5892. Below, 1.5750, is providing  major support. Next, 1.5639, has strengthened in a support role. This is followed by 1.5520, a strong support level since January. The final line for now is the round number of 1.54, which has provided support to the pair going back to September 2011.

I remain  bullish on GBP/USD.

Despite lukewarm economic data coming out of the UK, the pound  has showed great strength in 2012,  gaining almost five cents against  the greeenback.  With the important  level of 1.60 under attack, traders may join  the fray and  continue to support the pound at the expense of the dollar.

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