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GBP/USD  showed some sharp movement upwards, climbing close to the 1.60 level, but closed slightly lower over the week, at 1.5830.The upcoming week is busy, with ten releases. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD.

Construction PMI and Net Lending to Individuals exceeded market expectations, as the UK economy  is showing  some signs of slight improvement.

Updates: Services PMI was down slightly in February, to 53.8. The index has been above the critical 50 level since January 2011. Halifax HPI disappointed the markets, falling by 0.5%. GBP/USD slipped under 1.58, trading at 1.5772. The pound continues to drop, as it fell below 1.57 before recovering to 1.5720. BRC Shop Price Index  rose 1.2%. GBP/USD barelled across the 1.58 level, trading at 1.5809. Official Bank Rate remained unchanged at 0.5%.

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

  1. Halifax HPI:  Publication time tentative.  The  Housing Price  Index is an important leading indicator of the health of the UK housing sector.  In February,  the index rose above zero for the first time since  Novemeber 2011. The forecast for March is for a small rise of 0.3%.
  2. Services PMI: Monday, 9:30. The  services sector has been one of the bright spots in  the  UK economy, as the index has been above the 50 level since January 2011. Little change is predicted for the March reading.  See how to trade this event.
  3. BRC Retail Sales Monitor: Monday, 00:01. This indicator  preempts government-released retail data by about 10 days. The indicator has been in negative territory for much of  the past year, as the retail sector struggles. Last month the reading was -0.3%. If the  indicator can climb above  the zero level in March, it would mark the first  reading in  positive territory since  October 2011.
  4. BRC Shop Price Index: Tuesday, 00:01. This  indicator provides important data about consumer inflation. The indicator has dropped for four straight months, with the February reading down to 1.4%.
  5. Asset Purchase Facility: Thursday, 12:00. Also known as the QE program, this indicator measures the amount of funds that the central bank will create and purchase assets in the open market. The market forecasts are usually, but not always accurate. The previous reading was 325B,  the highest amount since the program began in 2009. No    change is predicted this month.
  6. Official Bank Rate: Thursday, 12:00. Interest rates in the UK have been pegged at 0.5% for the past two years, and no change is expected this month.
  7. Manufacturing Production: Friday, 9:30. Manufacturing Production had its best reading last month since July 2011, at a healthy 1.0%. The markets are predicting a weaker reading of 0.4% for March. Will the indicator again surprise the makets with a strong reading?
  8. PPI Input: Friday, 9:30. Also known as CPI, this is the leading indicator of consumer inflation. The index recorded a 0.5% increase last month, and the markets are predicting a slight increase in March.
  9. Consumer Inflation Expectations: Friday, 9:30. This indicator, released quarterly, is based on a survey of consumers as to their expectations about inflation over the next 12 months. The indicator has been hovering around the 4% level for the past several months.
  10. NIESR GDP Estimate: Friday, 15:00.  This indicator tries to predict GDP on a monthly basis, as official GDP figures are only released on a quarterly basis. The indicator fell by 0.2% last month, its first foray into negative territory since February 2o11. Will the indicator rebound back into positive territory in March?

* All times are GMT.

GBP/USD Technical Analysis

Pound/dollar started  the week at 1.5884.  After dropping to low of 1.5799, it bounced back, climbing  as  high  as 1.5992, just shy of  the strong resistance line at 1.60 (discussed last week). Pound/dollar then retracted, closing  the week at 1.5832.

Technical levels from top to bottom

We  start  with  the strong resistance level of 1.6472, which has not been tested since August 2011. The next line of resistance is at 1.6426. This is followed by resistance at 1.6265. Next, 1.6132 has provided strong resistance since November of last year. Below, there is resistance at 1.6065. GBP/USD went as high as 1.5992, just shy of the important resistance level of 1.60, before retracting. These levels have not been seen since last November. Next, 1.59 was breached this week, but continues to provide weak resistance. Close by, the line of 1.5860 is a weak resistance line, which could be breached on an upward move by the pair.

This is followed by 1.5750, which continues to provide support to GBP/USD. The  next line of support is at 1.5720. Below, 1.5629 has held fast as a support line since late January. Next, 1.5520 is providing strong support. Finally, the round number  of 1.54, which served as strong support in November and December 2011,  is again  providing support to the pair.

With some strong movement downwards by GBP/USD this week, the important line of 1.5755 continues to be tested. It is still acting as weak support for the pair. The  next line of support is a   weak one, at 1.5720. Below, 1.5629 has held fast as a support line since late January. Next, 1.5520 is providing strong support. Finally, the round number  of 1.54, which served as strong support in November and December 2011,  is again  providing support to the pair.

I remain  bullish on GBP/USD.

GBP/USD was again on an upward move last week, climbing close to the 1.60 level. Barring any unforeseen economic news, the pair  could continue its upwards push.

Further reading: