GBP/USD started the week with a move upwards, and closed in on the 1.57 level. It then fell sharply, breaking below the 1.54 level, before recovering slightly. The upcoming week is a busy one, with seven releases. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD. The pound continues to show weakness against the greenback, due in large part to the sluggish UK economy and continuing debt crisis affecting the eurozone. Updates: Pound/dollar dropped at the beginning of the week under 1.54, but managed to recover, following the euro. The British pound suffered from a higher than expected trade deficit (8.6 billion) and the warning from Fitch about the euro-zone added to the mess. According to Elliott Wave theory, dark days are expecting cable. GBP/USD graph with support and resistance lines on it. Click to enlarge: BRC Retail Sales Monitor: Tuesday, 00:01. The indicator has dropped for three consecutive months, and is now in negative territory. The monitor is a good indication of the pessimism gripping the UK consumer – little spending, and even less confidence in the economy. This is causing a negative ripple effect which is being felt throughout the economy. RICS House Price Balance: Tuesday, 00:01. This indicator provides an important measure of inflation and activity in the housing industry. The readings have been in negative territory since 2010, pointing to a housing sector in deep trouble. The markets are predicting little change this month. BRC Shop Price Index: Wednesday, 00:01. The Shop Price index provides a snapshot of consumer inflation although it is fairly narrow in scope. The index is currently hovering around 2%, and has been on a slow but steady drop since the summer. Trade Balance: Wednesday, 9:30. The Trade Balance indicator is important to traders, since an increase in UK exports means more foreigners are purchasing British pounds. Trade balance figures are deep in negative territory, although last month’s readings were better than predicted by the market. The forecast for this month calls for a slight drop in the trade balance numbers. Manufacturing Production : Thursday, 9:30. This index is based on a survey of purchase managers in the manufacturing industry. For almost all of 2011, the index stayed above 50, indicating expansion in the services sector. For this month, the market is predicting another reading just above the 50 level, at 51.6. NIESR GDP Estimate: Thursday, 15:00. This indicator focuses on the change in GDP over the past three months. The previous reading came in at 0.2%, down form the previous two readings of 5%. This indicates a slowdown in growth, which does not bode well for the weak UK economy. PPI Input: Friday, 9:30. This indicator measures the the inflation in goods and raw materials purchased by manufacturers. The previous reading was up, but only to 0.1%. The forecast is unchanged, indicating little inflation and weak activity in the manufcaturing sector. * All times are GMT. GBP/USD Technical Analysis Pound/dollar started the week at 1.5496. It climbed to 1.5669, within striking distance of the 1.57 resistance line (discussed last week). The pound then lost ground, dropping sharply to 1.5376, before recovering to close at 1.5411. Technical levels from top to bottom We begin with the resistance level at the round number of 1.61. Next, 1.6045 proved to be a weak resistance level in November, but it has not been tested since then. Below, is the level of 1.59, which provided strong support in November, and is now acting as a major resistance line. 1.5815 has proven to be a strong line of resistance since mid-November. The round number of 1.57 is providing weak resistance, and was breached several times in December. The next line is 1.5580, which is also a weak support level. Next, the line of 1.5415 is providing weak support, and was breached again this week. Below, 1.5360 is a weak support level. There is a strong support line at 1.5330, followed by 1.5270. The final support level for now is 1.5120. I remain bearish on GBP/USD. Economic indicators in the UK remain sluggish, and the economy is likely headed for a recession in 2012. If the economy in the US continues to improve, the dollar may make significant gains at the expense of the pound. 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 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. Kenny Fisher Kenny Fisher Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer. Kenny's Google Profile View All Post By Kenny Fisher GBP USD ForecastMajors share Read Next Scalper Protection for Forex Brokers Announced by Leverate Yohay Elam 10 years GBP/USD started the week with a move upwards, and closed in on the 1.57 level. It then fell sharply, breaking below the 1.54 level, before recovering slightly. The upcoming week is a busy one, with seven releases. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD. The pound continues to show weakness against the greenback, due in large part to the sluggish UK economy and continuing debt crisis affecting the eurozone. Updates: Pound/dollar dropped at the beginning of the week under 1.54, but managed to recover, following the euro. 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