GBP/USD rebounded last week and posted gains. A week prior, the pound suffered its worst week in over two years, with losses of 2.5%. There are three events on the schedule in the upcoming week. Here is an outlook for the highlights and an updated technical analysis for GBP/USD.

In the U.K, the key event was Manufacturing PMI, which slipped to 47.5 in December, down from 48.9 a month earlier. The index has not cracked the 50-level since April, which points to ongoing contraction in manufacturing.

The U.S released the Federal Reserve minutes on Friday. Policymakers said they expected rates to remain steady “for a time”, but did note continuing downside risks to the U.S. economy due to global trade tensions. ISM Manufacturing PMI slipped to 47.2 in December, down from 48.1 a month earlier. This was shy of the estimate of 49.0 and the weakest reading since June 2009.

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

1. Final Services PMI: Monday, 9:30. The PMI is expected to be revised slightly higher to 49.1, after an initial reading of 49.0 in December. This points to contraction in the services sector.
2. Halifax HPI: Wednesday, 8:30. The housing inflation indicator recorded a strong gain of 1.0% in November, well above the estimate of 0.2%, The estimate for December stands at 0.6%.
3. BRC Retail Sales Monitor: Thursday, 0:01. This consumer spending gauge plunged in November, with a reading of 4.9%. A small decline of 0.5% is projected for December.

GBP/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at the round number of 1.3500. 1.3375 is next.

1.3300 has held in resistance since mid-December. 1.3170 follows.

1.3070 is an immediate support line and could see action early in the week.

1.3000 (mentioned last week) has some breathing room in support after gains by GBP/USD last week.

1.2910 has held in support since early December. 1.2850 is next.

1.2728 has provided support since mid-October.

1.2616 is the final support level for now.

I am bullish on GBP/USD

The U.S. dollar has shown some weakness lately, and the pound has taken advantage, with gains of 2.5% in the month of December. The pound has room to move higher, as the currency climbed above the 1.35 level after the British election.