GBP/USD broke out and climbed sharply this week, pushing across the 1.60 line. The upcoming week has six releases, highlighted by Claimant Count Change. Here is an outlook of the upcoming events, and an updated technical analysis for GBP/USD.

UK releases looked sharp this week, highlighted by strong numbers in the manufacturing and services sectors. As well, the pound took full advantage of the weak US employment release to make further gains against the greenback.

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

1. RICS House Price Balance:Monday, 23:01. This housing indicator has been very weak of late, with the past two releases declining by over 20%. Little change is expected in the September reading.
2. Trade Balance: Tuesday, 8:30. The Trade Balance deficit widened to -10.1 billion pounds in August, a weaker reading than forecast. The markets are predicting that the deficit will narrow this month, to -8.9B.
3. Claimant Count Change: Wednesday, 8:30. This key employment index looked sharp last month, posting a decline of -5.9 thousand unemployed persons. The markets are predicting a slight increase in September of 0.1K. The UK unemployment rate is expected to hold steady at 8.0%.
4. CB Leading Index: Wednesday, 9:00. This composite index has declined for two consecutive readings. The markets will be hoping for a reading closer to the 0.0% line for September.
5. BOE Quarterly Bulletin: Wednesday, 23:01. This release by the BOE discusses economic conditions and monetary policy. A report that is more hawkish than anticipated is bullish for the pound.
6. 10-year Bond Auction: Thursday, Tentative. Recent yields on 10-year bonds have been below 2%, and the market is expecting a similar result for the September Bond Auction.

*All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5865 and  touched a low of 1.5850. The pair then rebounded to climb as high as 1.6034, as resistance at 1.6060 (discussed last week) held firm. GBP/USD closed at 1.6007.

Technical lines from top to bottom:

With last week’s surge by the pound, we begin at higher levels. There is resistance at 1.6475. This line has not been tested since August 2011. This is followed by the 1.6343 line. Next, there is resistance at 1.6247. This line was tested in late April, but has held firm since. The next line of resistance is 1.6122, which has not been tested since May. Next, there is resistance at 1.6060.

There is weak support at 1.5992. This line was providing resistance and protecting the important 1.60 level, but was breached this week as the pound flexed some muscle. It could be tested if the dollar rebounds. Next, 1.5930 is providing support, after being in a resistance role since May. The next support line is at 1.5805. This line has strengthened as the pair trades at higher levels. This is followed by 1.5750, which saw a lot of action in June and July.

Next is 1.5648, which continues to provide strong support. This is followed by support at the round figure of 1.5600. Below, there is support at 1.5521, which was last tested in August. The next line of support is at 1.5415. The final support level for now is 1.5348, which has held firm since June.

I am bullish on GBP/USD.

Stronger UK releases and poor employment data out of the US was the ideal recipe for the pound’s rally last week. Speculation over QE is increasing as the US economy continues to under-perform, and this could help the pound extend its gains against the greenback.

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.