The GBP/USD is trading around the 1.29125 ratio as of this writing. After a strong dip lower yesterday the GBP/USD touched a low of nearly 1.28680 in rather volatile trading conditions. The GBP/USD started the week near the 1.31000 mark but has not been able to sustain these highs. The lower move in the GBP/USD may be washing some of the over-exuberance which was sparked last week in the currency pair. This may propel some speculators to embrace the idea of a reversal of higher development in the short term.
Looking forward, day traders will now be confronted by nervous behavioral sentiment which is churning. While many financial institutions have believed the Bank of England would have to be the more aggressive of the central banks compared to the U.S Federal Reserve, the buying momentum of the GBP/USD was not able to be maintained. Economic data remains complex in the U.K. and U.S., and inflation is still high in Britain, but this week’s U.K Consumer Price Index numbers were slightly weaker than anticipated. And the U.S saw falling Retail Sales data and yesterday’s housing statistics declined.
U.S Federal Reserve Still Expected to Raise Interest Rates Next Week
The U.S. Federal Reserve is still expected to raise the Federal Funds Rate on the 26th of July. However, a counterbalance to this notion is the outlook the BoE will raise interest rates also, and the Bank of England may have to be more aggressive compared to the Fed long-term. Inflation in the U.K. is higher than U.S. data and this may create fundamental support for the GPB/USD moving forward.
The 1.300000 support level on early Wednesday proved vulnerable and now the 1.29000 ratio may be thought of as support. The behavioral sentiment which took the GBP/USD higher last week now seems to be reconsidering its motives, but bullish traders may still lurk. The volatility in the GBP/USD has been rather remarkable since the 10th of July and traders need to remain vigilant for additional reactions that produce fast price velocity.
GBP/USD Near-Term may prove to be a Technically Influenced
- The U.S. will release Existing Home Sales today, and if the number is lower than expected this could help ignite some buying of the GBP/USD.
- However behavioral sentiment may continue to react more to technical trading levels in the near-term as financial institutions try to position for the Fed’s monetary policy decision next week and mid-term outlooks.
- Tomorrow Retail Sales numbers will come from the U.K and Public Sector Net Borrowing statistics will also be released.
GBP/USD Short Term Outlook:
Current Resistance: 1.29210
Current Support: 1.29025
High Target: 1.29960
Low Target: 1.28950
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