The GBP/USD was trading near the 1.26150 mark on Friday which may have set off alarm bells among cautious speculators, this as Tuesday’s and Wednesday’s highs above the 1.27000 level seemed as if they would vanish into the sunset. Having started last week near the 1.25900 ratio, the gains made early in the week continued the bullish momentum that dominated November’s trading. The sudden move lower on Thursday and early Friday may have cost some traders money if they remained long in the GBP/USD while betting on additional ambitious climbs in value from the currency pair.
However, the week did not end badly for many GBP/USD bullish speculators. The Forex pair suddenly found the ability to climb higher on Friday and went from its lows and closed near the 1.27010 mark, somehow sustaining value above what may prove to be an important psychological level going forward for technical traders. Risk appetite flourished late on Friday as the Fed Chairman sounded rather neutral about monetary policy at a seminar in Atlanta. The higher move by the GBP/USD is near values levels seen on the 1st of September.
Look at a Six Month Technical Chart and Outlook for GBP/USD
In ten days the U.S Federal Reserve will release their FOMC Statement. Then on the next day, the Bank of England will issue their Official Bank Rate and Monetary Policy Summary. Neither central bank is expected to surprise financial institutions. The gains in the GBP/USD have developed in the past month as financial institutions have acted on their belief the British Pound had been oversold. Interest rates via government bonds appear calm for the moment.
Looking backward the GBP/USD was trading at its current levels late in August and early September, but the values seen in the summer occurred as the currency pair was suffering a bearish trend. The GBP/USD was trading near the 1.31450 vicinity in the middle of July 2023. Speculators who were looking at six-month technical charts late last week, and dreaming of higher values may have been hurt by the strong reversal lower which occurred on late Thursday and into Friday. Behavioral sentiment remains vital in the GBP/USD and looking forward risk appetite globally will affect the direction of the currency pair.
Data Overshadowed by Broad Market Results as Momentum Dominates
- U.S equity indices are near highs and U.S Treasury yields continue to trend lower, displaying risk appetite is likely still building.
- The USD has been weaker against many major currencies including the GBP.
- U.S jobs numbers will be published this Friday and impact Forex including the GBP/USD.
- However it is the Fed and BoE statements which will come on the 13th and 14th of December, that many financial institutions are gearing their outlooks to, this as they think about the next few months.
GBP/USD Weekly Outlook:
The speculative price range for GBP/USD is 1.26390 to 1.28010
Yes, the 1.27000 may prove important early this week. Traders however should understand that reversals lower are a natural part of Forex and betting on a blind upside is a mistake. While the bullish sentiment within the GBP/USD is attractive, speculators should use their risk-taking tactics carefully. If the 1.27000 proves durable in the near term for the GBP/USD, this will set the table for the potential of further explorations upward. The GBP/USD traded near the 1.27340 ratio this past Wednesday. Lower moves to 1.26900 and 1.26800 should be watched to see if these support levels prove durable.
If the GBP/USD begins to challenge last week’s highs and sustains value around 1.27300 it will be a bullish signal, but before the U.S jobs numbers on Friday, the currency pair will get plenty of impetus from existing behavioral sentiment and volatility could develop. Traders should watch the yields on U.S Treasuries, if declines continue to occur in the U.S bonds via yields this will be a sign financial institutions continue to position for greater risk appetite in U.S equities. Traders should not get too confident and be willing to cash out winnings should they develop. Speculators who want to bet on downside movement via reversals when technical highs have been hit should certainly use quick-hitting take-profit orders.
