The British pound enjoyed the greenback’s weakness for further gains. This week, the pound will be tested at home. No less than 12 events are expected now, including key PMI figures as well as the rate decision. Here’s an outlook for these events and an updated technical analysis for GBP/USD. The main downer of the dollar was the very dovish press conference from Ben Bernanke. Slow US growth didn’t help either. The situation in Britain isn’t really better. Let’s start: GBP/USD daily chart with support and resistance lines on it. Click to enlarge: Halifax HPI: Publication time unknown at the moment. This house price index is considered very accurate, as it’s based on the mortgage portfolio of HBOS. According to this big bank, prices edged up by 0.1% last month, after a drop beforehand. Another tick up is expected now, at a rate of 0.2%. Mervyn King talks: The governor of the BOE will testify in the European parliament on Monday at 13:00, and in Finland on Friday, at 9:30. The first appearance will probably be of higher importance, as it’s an official appearance, and comes on the background of thin markets – most European markets are closed for Labor Day. It’s also before the rate decision. King is usually quite dovish. Like Bernanke, King sees inflation as external / transitory, and is very reluctant to fight rising inflation with a rate hike. In his public appearances, King may comment on the GDP, inflation and might also hint about future monetary policy. Manufacturing PMI: Tuesday, 8:30. The manufacturing sector has led the economy up to the last month. Strong growth in this sector, as reflected with the purchasing managers’ index standing at above 60 points, has ended with a disappointing drop to 57.1 points last month. This isn’t expected to change now. CBI Realized Sales: Tuesday, 10:00. The Confederation of the British Industry provided a surprise last week. After a few months of deterioration in sales activity, the pace rose, with the score rising from 6 to 15 points. This score will likely repeat itself now. Note that much higher scores, of well above 40 points, were seen at the end of 2010. BRC Shop Price Index: Tuesday, 23:00. This “mini retail sales” release serves as a good indicator for the official release of retail sales published only in the following week. After a nice acceleration in the pace of rises to 2.7%, a slowdown was reported last month – 2.4%. Another slide is likely now. Nationwide HPI: Wednesday, 6:00. This house price indicator is less accurate that Halifax. Nevertheless, it always rocks the pound early in the day. After a nice rise of 0.5% last month, a more moderate rise of 0.3% is expected now. Construction PMI: Wednesday, 8:30. The construction sector has a growing importance in the British economy. After dipping into contraction a few months ago (with the services sector), it has recovered nicely. This survey of around 170 managers is now predicted to drop from 56.4 to 55.6 points. Mortgage Approvals: Wednesday, 8:30. The initial release of mortgage approvals by the BOE is usually worse than the final figure. Nevertheless, the fall below expectations that was seen in recent months weighs on the pound. 47,000 approvals are expected now. Note that the figure will be slightly overshadowed by the construction PMI due at the same time. Net Lending to Individuals: Wednesday, 8:30. A big surprise in either direction is necessary here for this figure to have a strong impact, as the previous two usually have a strong impact. Net borrowing is expected to slide from 2 to 1.8 billion pounds. Services PMI: Thursday, 8:30. This is the most important sector. Similar to construction, it also managed to see a quick recovery, with the PMI jumping to 57.1 points last time. A significant fall to 55.8 points is expected now. Any result will rock the pound on this all important figure. Rate decision: Thursday, 11:00. The recent meeting minutes have shown the unwillingness of the MPC members to raise the rates, pushing the decision further into the future. With the annual pace of inflation falling to 4%, the members have all the reasons to wait and leave the interest rate unchanged at the historic low of 0.5%. No change is expected in the Asset Purchase Facility (at 200 billion pounds for a long time). In recent months, the split within the Committee has prevented a statement. The pound is likely to tick down after the release. PPI: Friday, 8:30. Contrary to consumer prices, producer prices haven’t taken a breather. The main figure, PPI Input, has jumped by 3.7% last month, exceeding all expectations. A much more modest rise of 1.7% is expected now. PPI Output is likely to rise by 0.7%. Note that rising commodity prices mean that a significant upwards surprise cannot be ruled out. GBP/USD Technical Analysis After struggling in previous levels, the break above 1.66 (discussed last week) was very convincing – the pair didn’t look back. The pair managed to close above 1.67, but this move still needs to be confirmed. Looking up, and if 1.67 is indeed conquered, the next resistance line is only minor, at 1.6843. This was a line of resistance a long time ago. Much stronger resistance appears at 1.7042, a peak reached in August 2009, and the highest level since the height of the financial crisis. Above this line, there are pre-crisis areas, such as 1.72 and 1.75. They are still far. Looking down, 1.66 just proved to be a strong line of support, switching roles and remaining a distinct line. Minor support appears at 1.6530, which temporarily capped the pair in recent weeks. Moving lower, 1.6430, worked in both directions, first as support and just now also as resistance. The region of 1.6280 – 1.63 is the next line, which worked better as resistance rather than as support. Moving lower, the next line of support is rather minor – 1.6110 – it switched roles, and in the past few weeks prevented deeper falls. It’s followed by the round number of 1.60 continues to work as support, since August 2010, when it was a peak. It’s importance is diminishing. Stronger support is found at 1.5940 after it prevented a bigger fall. This is the key line on the downside now. I am neutral on GBP/USD. The unwillingness to raise the rates and the weak growth puts the British pound in a similar position as the US dollar. The neutral stance doesn’t mean no action – the busy calendar promises plenty of action in both directions. 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 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 GBP USD ForecastMajors share Read Next EUR/USD Bullish, Targeting The 1.5140 Level. Yohay Elam 12 years The British pound enjoyed the greenback's weakness for further gains. This week, the pound will be tested at home. No less than 12 events are expected now, including key PMI figures as well as the rate decision. Here's an outlook for these events and an updated technical analysis for GBP/USD. The main downer of the dollar was the very dovish press conference from Ben Bernanke. Slow US growth didn't help either. The situation in Britain isn't really better. Let's start: GBP/USD daily chart with support and resistance lines on it. 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