GBP/USD Outlook – October 4-8

A busy week expects Pound traders, as many important indicators are released. The rate decision is the main event. Here’s an outlook for the British events, and an updated technical analysis of GBP/USD.

GBP/USD daily chart with support and resistance lines marked. Click to enlarge:

The Pound lagged behind other currencies in the past week, failing to reach new highs against the dollar. The Pound was talked down by thoughts about new pound printing. This will reach a climax with the rate decision. Let’s start:

1. Halifax HPI: Publication timing unknown at the moment. This is considered one of the most accurate house price indices, as it’s based on the internal data that the HBOS possesses. According to this indicator, house prices returned to growth in the past two months, rising by 0.7% and 0.2%, exceeding expectations of drops. Now, a 0.6% rise is expected.
2. Construction PMI: Monday, 8:30. The construction sector disappointed last month with a drop. Another dip is expected in this survey of 170 purchasing managers – to 51.7 points, still above the 50 point mark that makes the difference between economic expansion and contraction.
3. Paul Tucker talks: Monday, 10:25. After Adam Posen suggested more pound printing, sending the Pound down, while another wants a rate hike (Sentance), we’ll get to hear what the BOE deputy governor has to say before the important rate decision. We’ve seen that speeches from MPC members have a very strong influence on the Pound.
4. Services PMI: Tuesday, 8:30. After the manufacturing sector disappointed with a low outcome, services aren’t expected to be much better – a slide from 51.3 to 51.2 is expected. As in the other purchasing managers’ indices, the score is expected to remain above 50. A dip under this critical mark means contraction of the services sector.
5. BRC Shop Price Index: Tuesday, 23:00. This release is usually overshadowed by other releases, but this time it will have a chance to move the Pound. A rise of 1.7% in prices at BRC retailers was seen last month, and a similar rise is expected now.
6. Manufacturing Production:  Thursday, 8:30. This release always rocks the Pound and overshadows the more comprehensive industrial production figure released at the same time. After dropping 4 months ago, manufacturing output rose by 0.3% on each month since then. Growth is expected to be slower this time – 0.1%. Industrial production is expected to rise by 0.3%.
7. Rate decision: Thursday, 11:00. British inflation refuses to slide back into the 1-3% target, and there’s still one member of the MPC, Andrew Sentance, that pledges a rate hike. The other members aren’t convinced and want to take the opposite direction to aid the economy – expansion of the quantitative easing program, standing at 200 billion for a long time. The rate will probably remain unchanged at 0.50%, and no new steps are expected, but any interesting wording of the accompanying statement will shake the Pound.
8. NIESR GDP Estimate: Thursday, 15:00. The National Institute of Economic and Social Research is usually quite accurate in predicting the actual growth. It will now release the growth rate in the three months that ended in September – the full third quarter. Last month’s estimation of 0.7% will probably be repeated now.
9. PPI: Friday, 8:30. Producer prices fell in the past 4 months, but this didn’t mean that consumer prices returned to the target. Now, PPI Input, the main figure, is expected to rise by 0.3%, while PPI Output is expected to rise by 0.2%. Another drop in producer prices will weaken the Pound.