The British pound had a bad week as many indicators have shown a slowdown in the British economy. The upcoming is very busy as well, with the rate decision being the highlight. Here’s an outlook for the British events, and an updated technical analysis for GBP/USD, now in lower ground. Only the construction sector was slightly better off in the series of purchasing managers’ indices. The most important sector, services, slowed down, and so did manufacturing. Will we see more signs of slowdown now? GBP/USD daily chart with support and resistance lines marked. Click to enlarge: BRC Retail Sales Monitor: Publication time unknown at the moment. Delayed from last week. This is one of the more accurate house price indices, as it is based on the internal figures from HBOS. After a few month of modest changes, the plunge of 1.4% seen last month was a big warning sign. A small correction is likely now, but note that another fall will hurt the pound. BRC Retail Sales Monitor: Monday, 23:00. This “mini-retail sales” indicator has triggered a lot of worries when it fell by 3.5% two months ago, but this was followed by an even sharper recovery, with a rise of 5.2% last time. A small drop is likely now. BRC Shop Price Index: Tuesday, 23:00. The British Retail Consortium publishes an index which measures inflation in its stores, and gives an early indication for the CPI. The annual rate of price rises is around 2.5%, and will likely remain at these levels. Trade Balance: Thursday, 8:30. Last month, the deficit in the UK was slightly worse than expected ‘ 7.7 billion pounds. A rise towards 8 billion is expected now, and this will likely weigh on the pound. Rate decision: Thursday, 11:00. No change is expected from the MPC this time. Despite inflation reaching 4.5%, there is little chance that Mervun King and his associates will move now, given the weak state of the economy. July is more likely. Also the QE program, called Asset Purchase Facility is expected to remain unchanged at 200 million pounds. Manufacturing Production: Friday, 8:30. This key indicator always rocks the pound. Manufacturing rose by only 0.2% last time, and disappointed for a second month in a row. This sector led the economy a few months ago, but returned to dragging its legs. A small rise is likely now. The wider, though less important industrial production number, will likely rise at a similar pace to last month’s 0.9% rise. PPI: Friday, 8:30. In the past few months, also producer prices came out stronger than expected, and showed the broad reach of inflation. A repeat of 3.8% or 2.6% isn’t likely now, but rather a drop of 0.9% in PPI Input. Consumer Inflation Expectations: Friday, 8:30. With the growing importance of inflation, also this second tier figure is of high importance. The official quarterly number reflects consumer expectations for price rises in the next year. It has gradually risen and reached 4% last time. Another climb is likely now. NIESR GDP Estimate: Friday, 14:00. This independent institute publishes GDP estimations for the three months that ended just now. This is an important indicator for the month of May and for the third quarter. For the 3 months that ended in April, NIESR showed a growth rate of only 0.3%. A fall to 0% will be worrying. * All times are GMT. GBP/USD Technical Analysis Early in the week, pound/dollar made a temporary break above the 1.6530 line (mentioned last week). This proved to be a very temporary move and the downfall began from there. The pair eventually found support at the 1.6280 to 1.63 region. Technical levels, from top to bottom: The ultimate resistance line is the 2009 peak of 1.7042 which is important resistance in the distance. It was the highest level since the financial crisis. Minor resistance is found at 1.6843, which was a line of resistance in the past. 1.67 remains strong resistance, despite temporary breaches in recent weeks. These were false breaks. 1.66 is even stronger, being very distinct – separating between low and high ranges a few weeks ago, and having a role in the past as well. 1.6530 capped recovery attempts in recent weeks, and did so just now. The break above it was false and temporary. A more pivotal line is 1.6430, which worked in both directions in recent months and was breached for quite a short time now. This area is now resistance. The veteran 1.6280 to 1.63 isn’t too far off, proved to be a very strong line. It was a peak several times in recent months and worked better as support. Further below, 1.6110 is another veteran line. It’s second test didn’t work (after a previous successful one), but it is still of importance. The round number of 1.60, which was a peak in August 2010 and resistance afterwards, is only minor support now. More significant support is at 1.5940, which was tested more than once. The next levels below are 1.5820 which was a trough before the current wide range trading and 1.5750 will be the final line for now. I remain bearish on GBP/USD. Evidence continues to pile up that the British economy is slowing down, not only in Q1, but also in Q2 2011. There are estimations that the rate hike will be postponed as far off as November. FX Tech Strategy analyzes GBP/JPY and sees the dragon biased to the downside. 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 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 AUD/USD Outlook June 6-10 Yohay Elam 11 years The British pound had a bad week as many indicators have shown a slowdown in the British economy. The upcoming is very busy as well, with the rate decision being the highlight. Here's an outlook for the British events, and an updated technical analysis for GBP/USD, now in lower ground. Only the construction sector was slightly better off in the series of purchasing managers' indices. The most important sector, services, slowed down, and so did manufacturing. Will we see more signs of slowdown now? GBP/USD daily chart with support and resistance lines marked. 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