The British pound lost close to two cents against the US dollar as GBP/USD closed at 1.5484. The upcoming week has eight releases, including Manufacturing Production. Here is an outlook for the upcoming events, and an updated technical analysis for GBP/USD.

The Bank of England maintained interest rates at 0.50%, but did inject 50 billion pounds in QE, for a total of 375B. Weak US employment numbers also helped the dollar, as investors sought safe havens due to the turmoil in Europe and the ECB interest rate cut.

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

1. BOE Deputy Governor Paul Tucker Speaks: Monday,Tentative. Following last week’s decision by the BOE to add GBP 75 billion in QE, the markets will be paying close attention to Tucker’s remarks. If his comments are more hawkish than expected, the pound could benefit.
2. BRC Retail Sales Monitor: Monday, 23:01. This indicator is useful in predicting the official release of Retail Sales, which is published later in the month. The indicator posted a 1.3% increase last month, and the markets will be hoping for another solid gain in July.
3. RICS House Price Balance: Monday, 23:01. This housing inflation indicator has been mired in deep negative territory since 2010. The markets are not expecting any change in the July release.
4. Manufacturing Production: Tuesday, 8:30. After a disappointing contraction in the June release, the market forecast for July calls for a very modest gain of 0.1%.
5. Trade Balance: Tuesday, 8:30. The Trade Balance deficit widened in June, with a reading of 10.3 billion, well below the forecast of -8.5B. The forecast for July calls for a improvement, with a estimate of -9.0B.
6. NIESR GDP Estimate: Tuesday, 14:00. This indicator estimates GDP on a monthly basis, as the official GDP figures are published each quarter. The indicator has posted a slight gain of 0.1% for the past four readings.
7. 10-year Bond Auction: Thursday, tentative. The previous 10 year bond auction posted an average  yield of 1.92%. The indicator has generally been on a downswing, and this was the first average yield to drop below 2% this year.
8. CB Leading Index: Friday, 9:00. This index is composed of seven economic indicators. The index posted a weak 0.2% gain, its lowest reading since March.

*All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5678. The pair rose to a high of 1.5721, as resistance held firm at 1.5750 (discussed last week). GBP/USD then retraced, falling all the way to 1.5461. The pair closed the week at 1.5484.

Technical levels from top to bottom

With the pound slumping, we start this week at lower levels.   There is resistance at 1.6060. Below, is the line of 1.5992, protecting the important 1.60 level. This is followed by resistance at 1.5930. The next resistance line is just above the 1.58 line, at 1.5805. This line was last breached in late May, as the pound went on a sharp down slide. Close by is 1.5750, which held firm as the pound made a brief push upwards early in the week.

Next, 1.5648 which has been alternating between support and resistance roles, is currently providing resistance following the strong surge by the dollar. This is followed by  the round figure of 1.5600, which just last week was providing support to the pair. Next, 1.5521 was breached by GBP/USD and is providing weak resistance. This line could be tested if the pound rebounds. 

The pair is receiving support at 1.5415. Below, there is support at 1.5361, a line which has held firm since early June. Close by, there is support at 1.5309. This line has not been breached since September 2010. This is followed by support at 1.5229. The next support level is at 1.5124, which has not been tested since July 2010. Below, there is support at 1.5054, which was last breached when the pair moved up sharply in June 2010. The final support level for now is 1.4891.

I am bearish on GBP/USD.

GBP/USD exhibited a steady downswing this past week, and we could see the trend continue. The implementation of QE3 by the BOE underscores the weak UK economy, and nervous markets could mean further trouble for the pound.

Further reading:

• For a broad view of all the week’s major events worldwide, read the USD outlook.
• For EUR/USD, check out the Euro to Dollar forecast.
• For the Japanese yen, read the USD/JPY forecast.
• For the Australian dollar (Aussie), check out the AUD to USD forecast.
• For the New Zealand dollar (kiwi), read the NZD forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.
• For the Swiss franc, see the USD/CHF forecast.