GBP/USD reversed directions last week and declined 1.3 percent. The only events in the upcoming week are employment indicators. This week’s sole events are employment indicators. Here is an outlook for the highlights of this week and an updated technical analysis for GBP/USD.

In the U.K., GDP reports were mixed. Monthly GDP declined in March by 0.1%, above the estimate of 0.0%. There was better news from the quarterly indicator. Preliminary GDP for Q1 came in at 0.5%, matching the forecast. This was up from final GDP in Q4, which climbed 0.2%. Manufacturing Production remained steady at 0.9% in March, crushing the estimate of 0.1%.

In the U.S, the focus was on inflation. The producer price index slowed to 0.2% in April, down from 0.6% a month earlier. The core release also lost ground, dropping from 0.3% to 0.1%. This was followed by consumer inflation reports. CPI dropped from 0.4% to 0.3%, shy of the estimate of 0.4%. The core release remained stuck at 0.1%, short of the estimate of 0.2%.

The week was marked by escalating trade tensions between the U.S. and China. President Donald Trump made good on his tariff threat, as the U.S. raised tariffs on $200 billion worth of Chinese goods on Friday, from 10% to 25%. Trump announced the move on Sunday, which sent shock waves across equity markets during the week.

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

1. Employment Data: Tuesday, 8:30. Wage growth rose to 3.5% in February, its highest level since July 2008. The indicator is expected to dip to 3.4% in March. Unemployment rolls climbed to 28.3 thousand in March, well above the estimate of 17.3 thousand. The estimate for the April release stands at 24.2 thousand. The unemployment rate has sparkled, with two straight readings of 3.9%. No change is expected in March.

* All times are GMT

GBP/USD Technical analysis

Technical lines from top to bottom:

With the pound dropping sharply last week, we begin at lower levels:

1.3375 was a high point in July. It is followed by the round number of 1.3300.

1.3217 was the high point of the pound rally in late January.

1.3170 was a swing high in early November.

1.3070 was a high point in mid-November.

The round number of 1.3000 remains fluid. This line was tested during the week.

1.2910 (mentioned last week) is next.

1.2850 capped recovery attempts in late November.

1.2728 was active in the first half of January.

1.2616 is the final support level for now.

I am neutral on GBP/USD

With the pound showing sharp swings in the month of May, it’s not clear which pound will show up this week. With Brexit on the back burner, investors will be keeping a close eye on economic data. If British wage growth remains strong, as expected, the pound could get a boost.