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GBP/USD  was up almost 200 pips,  closing the week at 1.5835. The upcoming week is quite busy, with  eight  releases. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD.

Despite the mixed  economic news coming out of the UK, the pound had a late surge last week, as it continues to perform well against the dollar in 2012.

Updates:Rightmove HPI rose 1.6%, a sharp decrease compared to February. CPI was up 3.4%, exactly as the markets predicted. CBI Industrial Order Expectations fell to -8, dropping from last month. Public Sector Borrowing rose,  recording a deficit of 12.9B. This was  the worst reading since December 2011. GBP/USD is trading just above the 1.58 level, at 1.5804. The markets are waiting for the release of Nationwide Consumer Confidence.

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

 

  1. Rightmove HPI: Monday, 12:01.  This  indicator measures inflation in the UK housing sector. The index  jumped 4.1% in February, its highest level since October 2011. If other housing indicators follow  suit and  signal renewed activity in the housing industry, this  would be  bullish for the pound.  
  2. CPI: Tuesday, 9:30. The most important inflation index has been on a  steady downward trend since October. The February reading came in at 3.6%.  The market forecast for March is for another small decrease, to 3.4%.    
  3. CBI Industrial Order Expectations: Tuesday, 11:00. This diffusion  index is  based on a survey of manufacturers.  The index was up to -3 in February, its highest level since August 2011. The market forecast calls for a slight drop to -5. If the indicator can stay close to the zero level or push into positive territory, this would be bullish for the pound.
  4. Public Sector Net Borrowing: Wednesday, 9:30. The budget had a surplus in February of 10.7B, well above the market forecast of 8.9B. The markets are forecasting a deficit of 5.2B in March. If the indicator can beat this gloomy forecast, the pound could benefit.
  5. Annual Budget Release: Wednesday, 12:30. The reaction of the market to the annual budget can change the direction of the pound, so traders should take note of this event.
  6. Retail Sales: Thursday, 9:30. Retail sales sparkled last month. This indicator jumped 0.9%, a nine-month high, and surprised the markets, which had forecast a 0.3% drop. The markets are predicting a 0.5% drop in March. Will the indicator again surprise the markets this month with a strong reading?
  7. Nationwide Consumer Confidence: Friday, 12:01. This indicator measures consumer confidence in the UK. A confident consumer  is a spending consumer, which is critical for economic growth. The index hit 47 in February, a sixth-month high. The forecast for March is for another increase, and if the indicator can cross the 50 threshold, this would be bullish for the pound.
  8. BBA Mortgage Approvals: Friday, 9:30. Mortgage approvals is an important indicator of activity in the housing sector. The February reading hit 38.1K, its best number in over two years. The forecast for March call for further good news, with a slight increase to 39.1.
* All times are GMT.
   

GBP/USD Technical Analysis

GBP/USD  started  the week at 1.5650.  The pair  dropped to a low of  1.5620, dipping below the resistance line of 1.5629 (discussed last week). The pound ended the week with a bang,  as it shot up  as high as  1.5860, and closed the week at 1.5834.  

Technical levels from top to bottom

We  begin  with  the strong resistance level of 1.6356. This is followed by 1.6265.  Next, 1.6132  has provided  strong resistance since November 2011. Below, there is resistance at 1.6065. Next,  there is strong resistance at 1.5987, just shy of the  psychologically important line of 1.60.  This is followed by  the round number of 1.59, which is currently a weak resistance line.  It could be tested if the pound continues its strong push upwards. Below, 1.5750,  which just last week was in a resistance role, now finds itself providing support  to GBP/USD. Next, 1.5639, which was briefly breached this week, is providing support.  This is followed by 1.5520, a strong support level since January.  Below is  the round number of 1.54,  an important support level for the pair  going back  to September  2011.  The final support line for now is at 1.5336.

I remain  neutral on  GBP/USD.

GBP/USD, has been choppy recently, with the exception of a sudden surge by the pound at the end of last week.  With the mixed economic figures coming out of the UK, we may continue to see the pair make moves in both directions.

Further reading: