The British pound enjoyed the optimism that came from the coordinated central bank action. Will it break even higher? The upcoming week is very busy, with the rate decision being the highlight. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD. The housing sector is relatively stable: this was seen in another positive Construction PMI and another rise in house prices. On the other hand, manufacturing remains sluggish. We will get the last PMI figure and more housing data this week. Updates: Britain’s services sector is growing at a faster pace, and this helps the pound against dollar – US services PMI dropped. Another boost for the pound came from the Merkozy agreement, although Britain’s gain from EU Treaty changes may be very limited, to say the least. The British pound suffered from the Halifax HPI, which dropped by 0.9%. In addition ,the threat to downgrade all euro-area nations by S&P also helps the greenback. British manufacturing production dropped by 0.7%. This disappointment, and the European troubles, weighed on the pound. The Bank of England made no policy changes, as expected. The big show was left for the ECB, that made a lot of moves, but didn’t provide real hope with bond buys. GBP/USD stabilizes around the 1.5630 line. A smaller deficit in the British trade balance helped the pair recover, despite European weakness. GBP/USD graph with support and resistance lines on it. Click to enlarge: Halifax HPI: Publication time unknown at the moment. This is one of the more accurate house price indices available in the UK, as the data is compiled through the internal figures of HBOS. The US housing market has been relatively resilient. Last month’s 1.2% rise was very impressing. A small dip is likely now. Services PMI:Monday, 9:30. The manufacturing sector is contracting, while the construction sector is still growing according to PMIs. The services sector is the most important one. Last month’s figure was 51.3, showing very slow growth. Even slower growth is expected now, with a score of 50.9. A dip under 50 points reflects contraction. If this happens now, the pound will fall. BRC Retail Sales Monitor: Monday, 00:00. This “mini retail sales” indicator has been like a see-saw: exchanging drops and rises every month. After last month’s drop of 0.6%, a small rise is likely now. BRC Shop Price Index: Wednesday, 00:00. The second release from BRC relates to prices. After a few months of higher figures, the annual pace of price rises dropped to 2.1%. A drop under 2% will provide a sign that inflation is falling. Manufacturing Production: Wednesday, 9:30. After three consecutive months of drops, the level of manufacturing rose by 0.2%. This important indicator will likely turn positive once again, and drop by 0.1%. A bigger drop cannot be ruled out, as manufacturing PMIs are negative. The wider industrial output figure will likely print a bigger drop, 0.3%. NIESR GDP Estimate: Wednesday, 15:00. This independent think tank provides fresh estimates for the size of the economy. According to NIESR, the economy grew by 0.5% in the three months ending in October. We will now get an estimate for September, October and November, and the figure will likely be lower. Contraction cannot be ruled out. Rate decision: Thursday, 12:00. Mervyn King and his colleagues will not change their policy this time, but rather wait for the next meeting in January. The global headwinds, rising unemployment and the government’s acknowledgement all point to more significant easing, yet the MPC will likely opt to wait this time. Trade Balance: Friday, 9:30. Britain saw a worrying rise of its trade deficit last month, to 9.8 billion. This is a high and disappointing deficit. A small drop to 9.5 billion is expected now. If the deficit exceeds the psychological 10 billion, the pound will suffer. PPI: Friday, 9:30. While slightly overshadowed by the trade balance figure, this inflation indicator is still of high importance. After a drop of 0.8% last month, a rise of 0.3% is expected in the primary figure: PPI Input. PPI Output is due to rise by 0.2%. * All times are GMT. GBP/USD Technical Analysis Pound/dollar started off with a gap higher. The rise stopped exactly at the 1.5780 line (mentioned last week). The pair lost ground and eventually closed just under 1.56. Technical levels from top to bottom We start from the round number of 1.60 that served in both directions during 2011. 100 pips below, 1.59 was the bottom border then the pair traded lower, and couldn’t be reconquered. 1.5850 proved to be a tough line of resistance before the recent break higher and now returns to its previous role. It is followed by the swing low of 1.5780, which worked perfectly well at the end of November, capping an attempt to rise. 1.5690 joins the chart after being the bottom of the crash in November. It capped the pair earlier. 1.5633 worked as support during September was only very temporarily breached in October. 1.5576 was a swing low in December and serves as immediate support. It is followed by 1.5520 which was the bottom line of the recent range, and had a similar role back in 2010. Further below, 1.5470 was support and resistance in the past, and lately in September and worked quite well now. 1.5423 was the bottom of November, and is a strong support line now. 1.5340 also had a role early in the year, and the pair bounced off this line in September. The last line is the trough of 1.5271, which was reached after the announcement of QE2 in Britain. Even lower, 1.5120 is the final cushion before the very round number of 1.50. I remain bearish on GBP/USD. Unless the ECB is utilized in full to stop the flood of the debt crisis, the markets will likely fall again and the pound is not immune. In addition, the government in Britain already acknowledged the downturn, and more QE is around the corner. If you are interested in GBP/JPY and technical setups for this pair with binaries, see this week’s GBP/JPY binary technical setup. 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 to Dollar forecast. For the Japanese yen, read the USD/JPY forecast. For GBP/USD (cable), look into the British Pound forecast. For the Australian dollar (Aussie), check out the AUD to USD forecast. For the New Zealand dollar (kiwi), read the NZD forecast. For the Swiss Franc, see the USD/CHF forecast. 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 Expert score 5 Etoro - Best For Beginner & Experts0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 5 Read Review Open My Free Account Your capital is at risk. GBP USD ForecastMajors share Read Next USD/CAD Outlook December 5-9 Anat Dror 10 years The British pound enjoyed the optimism that came from the coordinated central bank action. Will it break even higher? The upcoming week is very busy, with the rate decision being the highlight. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD. The housing sector is relatively stable: this was seen in another positive Construction PMI and another rise in house prices. On the other hand, manufacturing remains sluggish. We will get the last PMI figure and more housing data this week. Updates: Britain's services sector is growing at a faster pace, and this helps… Top Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.