The GBP/USD went into the weekend near the 1.20860 level, after starting the week near a high around 1.21000. If traders were not paying attention while celebrating their New Year holiday they might look at the two numbers with a simple shrug and decide Forex was quiet. However, that assumption would be wrong.
The GBP/USD incrementally tracked lower most of last week and fell to its deepest lows on Friday and touched the 1.18450 realms. The movement lower seemed to be a confirmation that financial houses were selling the GBP/USD based on the notion the U.S Federal Reserve will continue to be rather active regarding interest rate policy and that outlook remains unclear.
U.S Hourly Earnings Delivered a Hopeful Signal for GB/USD Bullish Traders
While technical traders may say the sudden surge in buying was because lows on Friday were last seen in November, there is reason to point to fundamentals. The U.S. published employment data on Friday and among the reports were the Hourly Earnings statistics which came in lower than expected. The wage data which is looked at via inflationary perspectives by many points out that price pressure in the U.S. may be lessening. The lower earnings numbers may have sparked the notion that this evidence can be used while trying to forecasts the interest rate policy of the U.S Federal Reserve.
- The U.S. will release key Consumer Price Index data this coming Thursday and the outcome will impact the GBP/USD.
- If CPI data from the U.S. meets expectations or comes in slightly lower this could spark additional buying in the GBP/USD.
Higher Range again in Sight for GBP/USD Traders
After touching lows on Friday that challenged values seen in the last week of November, the GBP/USD has managed to climb upwards and it is once again within sight of its higher price range. Coming into this week the GBP/USD is strongly above the 1.20000 ratio and if it is able to sustain these current levels the 1.21000 mark will certainly become a focus. Before going into the weekend as the GBP/USD surged higher, but the currency pair was not able to break above 1.21000.
GBP/USD Weekly Outlook:
The speculative price range for GBP/USD is 1.19565 to 1.22410
Bearish traders who believe the GBP/USD is overbought may have technical reasons to suspect reversals lower are still going to be produced that can be wagered on in advance. The strong move upward on Friday of last week was enough to change the price range of the GBP/USD, but it has likely not changed the total behavioral sentiment within Forex. If the GBP/USD breaks below the 1.20600 mark and starts to flirt with the 1.20500 to 1.20300 ratios this could be viewed as a normal lower trading range. Traders should also acknowledge that full volumes are coming back into Forex and the GBP/USD will certainly see some volatility as the size of commercial transactions increases this week.
Consumer Price Index from the U.S. will prove extremely important for the GBP/USD this coming Thursday. Until this number is published trading in the GBP/USD may remain choppy as ratios are tested and technical ranges are viewed.
If the 1.20500 mark is able to prove durable this week and values are sparked higher the GBP/USD could see more buying development. If the 1.21000 level is toppled and sustained, traders could anticipate higher levels and dream about values seen in the middle of December. However, it is most likely the GBP/USD will have to see inflation numbers via the CPI come in weaker than anticipated for another significant buying surge to be demonstrated.
Traders should remain realistic about their goals if they are wagering on upside price action. Being long the GBP/USD this coming week may prove to be a worthwhile bet, but caution and strong risk management will be needed.
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