GBP/USD was unchanged over the week, closing just above the 1.60 line, at 1.6011.

GBP/USD was unchanged over the week, closing just above the 1.60 line, at 1.6011. The upcoming week is quite busy, with 13 events. Here is an outlook of the upcoming events, and an updated technical analysis for GBP/USD.

UK data was generally positive last week, with Preliminary Business Investment and CB Realized Sales easily exceeding the estimates. Despite the solid data, GBP/USD showed very little movement during the week.

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

• Manufacturing PMI: Monday, 9:30. Manufacturing PMI has been stuck below the 50 point level since May, indicating continuing contraction in the UK manufacturing sector. The estimate for the December reading stands at 48. 1 points.
• BRC Retail Sales Monitor: Tuesday, 00:01. BRC Retail Sales Monitor precedes the government retail sales release by about 10 days.This consumer indicator disappointed last month, declining by 0.1%.
• Halifax HPI: Tuesday, 4th-7th. The housing inflation indicator has posted four consecutive declines, indicating weakness in the UK housing sector. The markets are expecting a stronger December reading, with an estimate of a modest 0.2% gain.
• Construction PMI: Tuesday, 9:30. Last month, this key release pushed above the important 50 point level, indicating slight expansion in the UK construction sector. This followed two straight readings below 50. The markets are expecting that the upcoming release will also be slightly above the 50 line.
• BRC Shop Price Index: Wednesday, 00:01. This retail inflation index jumped 1.5% last month, a six-month high. The markets will be hoping for another strong reading in the December release.
• Services PMI: Wednesday, 9:30. Services PMI has been above the 50 point level throughout 2012, indicating growth in the UK services industry. The markets are expecting that this month’s reading will be slightly over the 50 line.
• Autumn Forecast Statement: Wednesday, 12:30. This report is published on an annual basis. The report looks at the government’s budget for the coming year, including projected spending and income levels.
• Trade Balance: Thursday, 9:30. The Trade Balance deficit came in at -8.4 billion pounds, which was slightly below the forecast. The markets are expecting the upcoming release to show a slightly higher deficit.
• Asset Purchase Facility: Thursday, 12:00. QE has been steady at 375 billion pounds since July. The markets are expecting that the BOE will maintain this level in the December release.
• Official Bank Rate: Thursday, 12:00. The BOE’s key interest rate has been pegged at 0.50% since early 2009. No change is expected in the upcoming release.
• Manufacturing Production: Friday, 9:30. This key release has shown some fluctuation, with the result that market estimates often prove to be off the mark. The estimate for the December reading is a modest decline of 0.2%.
• Consumer Inflation Expectations: Friday, 9:30. This indicator is released each quarter, and is used by analysts to help predict actual inflation figures. The previous reading posted a gain of 3.2%, its lowest reading since 2009.
• NIESR GDP Estimate: Friday, 15:00. The GDP estimate is released each month. It helps analysts predict the official GDP numbers, which are released on a quarterly basis. The indicator posted a gain of 0.5% in the November release.

*All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.6030, and touched a low of 1.5962. The pair then rebounded, reaching a high of 1.6062, briefly moving above resistance at 1.6060 (discussed last week). GBP/USD closed the week at 1.6011

Technical lines from top to bottom:

We start with resistance at the round number of 1.66. Next, there is resistance at 1.6475. This line has held firm since August 2011. This is followed by resistance at 1.6343. This line was last breached when the pound dropped sharply in August 2011. We next encounter resistance at 1.6247. Below, 1.6122 is providing weak resistance. This line has held firm throughout since the beginning of November. Next, there is resistance at 1.6060. This line was briefly breached, but continues to provide weak resistance. Look for it to be further tested if the pound improves.

GBP/USD continues to receive weak support at 1.5992. The pair broke through this line as it lost some ground, before it bounced back above the 1.60 line. This is followed by 1.5930.  Next, there is strong support at 1.5850. This is followed by 1.5750, a support line which has held firm since August. Below, there is support at 1.5648.

We next encounter resistance at the round figure of 1.5600. This is followed by support at 1.5530. This line was last breached in August, when the pound started its impressive summer rally. The final support line for now is 1.5414, which has held firm since July.

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