GBP/USD Outlook May 27-31

The pound showed some movement in both directions, but ended the week with very modest losses, as GBP/USD close at 1.5122. The upcoming week is very quiet, with just four releases on the schedule. Here is an outlook of the events and an updated technical analysis for GBP/USD.

British inflation numbers, including CPI, missed their estimates, and Retail Sales looked awful. GDP salvaged the week, gaining 0.3%, which matched the forecast.

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

1. CBI Realized Sales: Wednesday, 10:00. CBI Realized Sales is an important leading indicator of consumer spending. The indicator has slid  badly in 2013, and dropped to -1 point in the April reading. This was its lowest reading since August 2012. The markets will be hoping that the indicator can climb back into positive territory in the upcoming reading.
2. Nationwide HPI: Thursday, 6:00. The UK housing market continues to struggle. This housing inflation indicator declined 0.1% in the May release, matching its lowest level in 2013. Will the indicator surprise the markets  with a strong reading this time around?
3. GfK Consumer Confidence: Thursday, 23:01. Consumer confidence is vital for the economy, as a confident consumer means a spending consumer. The indicator has been mired in deep negative territory, indicative of deep pessimism in consumer confidence. The indicator came in at -27 points in the previous reading, and little change is expected in the upcoming release.
4. Net Lending to Individuals: Friday, 8:30. This indicator provides a snapshot of consumer confidence and spending, as consumers will increase their borrowing if they are comfortable in spending more. The indicator dropped sharply to 0.9 billion pounds in April, which matched the forecast. The markets will be hoping for better news from the May release.

GBP/USD Technical Analysis

GBP/USD opened the week at 1.5175. The pair touched a high of 1.5281, but was unable to maintain this move. The pair dropped as low as 1.5092, but the support line of 1.5061 (discussed last week) held firm. GBP/USD closed the week at 1.5122.

Technical lines from top to bottom:

We start with strong resistance at 1.5648. This line has held firm since mid-February. We next encounter resistance at 1.5560. This line was providing support at the start of the month, but fell as the GBP/USD went on a sharp slide which continues. Next there is resistance at 1.5484. This is followed by 1.5416. This line was providing support, but the pair broke through early last week. We next encounter support at 1.5258. This line was active last week, and has strengthened in resistance as the pair trades at lower levels. Next, 1.5189 is providing weak resistance. It could see more action early this week.

GBP/USD continues to receive support at 1.5061. This line held firm as the pair pushed downwards and broke through the 1.51 line. This is followed by 1.5010, protecting the all important 1.50 level. Below is 1.4896, just below the round number of 1.49. It has held fast since mid-March. The final support line for now is 1.4648, which was last tested in June 2010.

I remain bearish on the GBP/USD.

Although the pound had a decent week, it has lost about four cents against the US dollar in May, and the British economy continues to look weak. The pair tested the 1.51 line , and their is more room for the pair  to fall.