GBP/USD Forecast Feb. 13-17

GBP/USD closed the week unchanged, at 1.2475. This week’s key events are Claimant Count Change and CPI. Here is an outlook for the highlights of this week and an updated technical analysis for GBP/USD.  

US numbers were mixed, as unemployment claims dropped and beat expectations. However, UoM Consumer Sentiment fell to a 3-month low, and missed the estimate. In the UK, Manufacturing Production surged 2.1%, well above the forecast of 0.3%.

Updates:

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

1. CPI: Tuesday, 9:30. CPI is the most important inflation indicator and should be treated as a market-mover. The index continues to rise and came in at 1.6% in December, above the forecast of 1.4%. The upward swing is expected to continue, with an estimate of 1.9%.
2. PPI Input: Tuesday, 9:30. This indicator measures inflation in the manufacturing sector. The index rebounded in December with a strong gain of 1.8%, but this was short of the forecast of 2.2%. The estimate for the January report is 1.0%
3. RPI Input: Tuesday, 9:30. RPI includes housing costs, which are excluded from CPI. In December, the index, rose to 2.5%, above the estimate of 2.3%. The upward swing in expected to continue, with an estimate of 2.8%.
4. Average Earnings Index: Wednesday, 9:30. Wage growth rose to 2.8% in November, above the forecast of 2.6%. Another gain of 2.8% is expected in the December release.
5. Claimant Count Change: Wednesday, 9:30. This is one of the most important indicators and an unexpected reading can have a significant effect on the movement of GBP/USD. The indicator sparkled with a reading of -10.1 thousand in December, compared to an estimate of 4.6 thousand. A small gain of 1.1 thousand is expected in January.
6. CB Leading Index: Wednesday, 14:30. This minor index has been steady and edged down to 0.0% in November.
7. Retail Sales: Friday, 9:30. Retail Sales is the primary gauge of consumer spending and should be treated as a market-mover. In December, the indicator declined sharply, with a reading of -1.9%. This was much weaker than the forecast of -0.1%. Will the indicator rebound  in January?