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The British pound  was hard hit last week, as GBP/USD lost close to 400 points. The pair closed the week slightly above the symbolic 1.50 level. There are 12 events this week. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

Last week’s pound collapse was more a question of “what’s right in the US” rather than “what’s wrong with the UK”. In the US,  employment data was very strong, as  the US gained 295 thousand  jobs in February, beating expectations. . In the UK, PMI numbers were a mix, and there were no surprises from the BOE, which maintained asset facility and interest rate levels.

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

GBPUSD_Forecast Mar.9-13

  1. BRC Retail Sales Monitor: Tuesday, 00:01. This indicator measures retail sales in BRC stores, so it is not as encompassing as the official retail sales indicator. The indicator bounced back with a gain of 0.2% in the February report.
  2. BOE Governor Mark Carney Speaks:  Tuesday, 14:35.  Governor Carney will testify before the Lords Economic Affairs Committee in London. Traders should be prepared for some volatility from GBP/USD during the testimony.
  3. External BOE MPC Member Ian McCafferty Speaks:  Tuesday, 18:30. McCafferty will speak at an event in Durham. Remarks which are more hawkish than expected is bullish for the pound.
  4. British Manufacturing Production: Wednesday, 9:30. This key event could have a significant effect on the direction of GBP/USD. The indicator slipped to 0.1% in December, within expectations. Little change is expected in the upcoming release.
  5. External BOE MPC Member Martin Weale:  Wednesday, 15:00. Weale will speak at an event in London. The markets will be listening for any clues as to the central bank’s future monetary policy.
  6. NIESR GDP Estimate:  Wednesday, 15:00. This monthly indicator helps gauge GDP, which  is released each quarter. The indicator has been very steady and posted a gain of 0.7% in  February. Will we see more of the same in March?
  7. BOE Quarterly Bulletin: Thursday, 00:01. This report contains an analysis of market developments and monetary policy, but  is a minor event which will unlikely affect the direction of GBP/USD.
  8. Trade Balance: Thursday, 9:30. Trade Balance  is  closely connected to currency demand, as foreigners must purchase  British goods with British pounds.
  9. BOE Governor Mark Carney Speaks: Thursday, 12:45.  Thursday, 12:00. Governor Carney will address an event in Sheffield. Remarks which are more hawkish than expected is bullish for the British pound.
  10. BOE Deputy Governor Nemat Shafik Speaks: Friday, 9:00. Shafik will speak at an event in London. A speech which is more hawkish than expected is bullish for the pound.
  11. Construction Output: Friday, 9:30. The indicator has struggled lately, and rebounded in the January report, with a gain of 0.4%. The markets are expecting a strong reading in February, with the estimate standing at 1.4%.
  12. BOE Chief Economist Andy Haldane  Speaks: Friday, 15:15. Haldane is very well-respected and the markets will be listening closely when he addresses a financial meeting in New York.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5405 and touched a  high of 1.5421. It was all downhill from there as the pair plunged all the way to a low of 1.5019, as support at 1.5008 held firm (discussed last week). The 1.5019 line  also marked the close of the week.

Live chart of GBP/USD:

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Technical lines from top to bottom

With the pair posting huge losses, we begin at lower levels.

1.5416 has switched back to a resistance line.

1.5290 is the next resistance line.

1.5114 was easily breached by the sagging pound, and has reverted to a resistance role.

1.5008  continues to  protect the symbolic 1.50 level, but is weak. Will the pair continue its downward spiral and break through this line?

1.4951 was an important support line in late January.

The final line for now is 1.4813. This  marked the start of a pound rally in July 2013 that saw GBP/USD climb above 1.61.

I am  neutral on GBP/USD.

After the pound’s disappearing act, will we see a correction this  week? The markets will be keeping a close eye on  British Manufacturing Production and Carney’s testimony in the House of Lords. Over in the US, speculation has risen that the Fed could hit the rate hike button in mid-2015, which is positive for the greenback.

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