GBP/USD was down slightly this week, as the pair closed just below the 1.60 line, ending the week at 1.5997. This week has five events, with Preliminary GDP the highlight. Here is an outlook of the upcoming events, and an updated technical analysis for GBP/USD.

Strong UK employment numbers and solid retail sales were not enough to bolster the pound this week. In the US, there was more mixed data, as Unemployment Claims were up, while the well-respected Philly Fed Manufacturing Index climbed to a six-month high.

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

1. BBA Mortgage Approvals:Tuesday, 8:30. This important housing indicator has been edging higher since July. The markets are expecting a very small increase for the October release, with an estimate of 30.9 thousand new mortgages.
2. BOE Governor Mervyn King Speaks: Tuesday, 17:00. The BOE Governor will deliver a speech at the Chamber of Commerce in Cardiff. Analysts will be looking for clues regarding interest rates, and a speech that is more hawkish than forecast is bullish for the pound.
3. CBI Industrial Order Expectations: Wednesday, 10:00. The indicator has looked weak in recent releases, indicating a sluggish manufacturing sector. The markets are expecting a slight improvement in October, with an estimate of -6 points.
4. Preliminary GDP: Thursday, 8:30. GDP is released every quarter, and an unexpected reading can affect the movement of GBP/USD. After three consecutive negative readings, the markets are expecting a turnaround in Q3 The estimate for the upcoming release is a respectable 0.6% gain.
5. Deputy Governor Paul Tucker Speaks: Thursday, 10:15. Deputy Governor Tucker will be speaking at a meeting in London. The MPC members set the BOE’s key interest rate, and analysts will be looking for clues as to future monetary policy.

*All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.6057, and the pair rose as high as 1.6157. GBP then retracted, dropping to a low of 1.5996, as the support line of 1.5992 (discussed last week) held firm. The pair closed the week at 1.5997.

Technical lines from top to bottom:

We start with resistance at the round number of 1.66, which was last tested in August 2011. Below, there is resistance at 1.6475. This is followed by the 1.6343 line, which was last breached when the pound dropped sharply in September 2011. We next encounter resistance at 1.6247. Below, is the line of 1.6122, which was breached temporarily this week, as the pound showed some strength before retracting. This is followed by 1.6060, which is providing weak resistance, after providing support just last week.

GBP/USD is receiving weak support at 1.5992. This line has held firm since early September, but looks to be tested if the pound continues to sag. Next is the line at 1.5930. This is followed by support at 1.5805.  This line has remained in place since early September. We next find support at 1.5750.

This is followed by support at 1.5648, which saw a lot of action in August. Below, there is support at the round figure of 1.5600, which has held firm since early August. Next is the support line of 1.5530. This line has held firm since August, when the pound started its impressive summer rally. The final support line for now is 1.5414, which was last breached in July.

I am bullish on GBP/USD.

UK releases were solid this past week, and employment and retail sales numbers were strong. The market could react positively to these numbers during the week. As well, there has been some improvement in US numbers, and further good news out of the US would be bullish 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 USD/CAD (loonie), check out the Canadian dollar forecast.