- A look at a one week technical chart of the GBP/USD provides an intriguing technical consideration as the trading week gets set to start.
- The currency pair touched a high at nearly 1.27000 on Monday of last week, went on to have sporadic reversals causing plenty of head scratching for some perhaps, and then touched a low around 1.26000 on Friday morning before finishing with a jump higher.
The GBP/USD will start its trading early on Monday near the 1.26545 level, which is a solid upwards accomplishment taking into consideration the currency pair was at 1.25360 on the 14th of February. Forex trading globally has been choppy as behavioral sentiment has taken spins and turns based on rather mixed U.S economic data. Additionally, U.K data has been rather problematic also, given that inflation remains rather high and growth hard to find in Britain.
Technical Considerations for the GBP/USD
While technical traders will likely point to the ability of the GBP/USD to touch a ‘clean’ high and a ‘clean’ low last week, this doesn’t mean they actually made money speculating on the currency pair. There have been many people who have gotten chewed up by the rather choppy conditions in the GBP/USD the past two months, including last week as rather volatile results have continued to be demonstrated.
The notion that the 1.26000 level and above is a rather fair market value for the GBP/USD at this time, taking into consideration the mixed outlooks regarding what the U.S Federal Reserve and Bank of England remains valid. Traders who had enough bullish sentiment to be buyers when values dropped last week to around the 1.26200 ratio on Wednesday and Thursday of last week may have posted profitable results. However, the GBP/USD like the broad Forex market remains mired under shadows, except there may be signs of sunlight starting to beam through if you are an optimist.
U.S Economic Data was Weaker and this is Encouraging
The Federal Reserve isn’t going to say it publicly, but last week’s lackluster U.S data can be viewed as a positive. Slightly lower growth numbers via the GDP, slightly weaker inflation statistics compared to the expectations, and consumer confidence numbers, which showed shoppers may be growing a bit cautious is actually a good sign for those who want the Fed to be in a position in which they will have to consider becoming dovish.
- The GBP/USD climbing higher before going into the weekend may signal financial institutions felt a bit more bullish about trading prospects for the currency pair.
- Monday’s opening for the GBP/USD and early European trading hours will be a telltale sign for the currency pair moving forward this week.
GBP/USD Weekly Outlook:
Speculative price range for GBP/USD is 1.26165 to 1.27240
Having started last week around its high and finishing lower going into the weekend may be viewed negatively by some, but for day traders the price action in the GBP/USD did produce reversals higher when support was tested. It can be argued that resistance also showed it was durable last week. The ability of the GBP/USD to open tomorrow’s trading near the 1.26545 mark will be a solid barometer, early trading will be intriguing.
The weaker data from the U.S last week may fuel some bullish sentiment in the GBP/USD early this week. The 1.26600 resistance level should be watched, if the GBP/USD can muster enough strength and penetrate this higher ratio and sustain values above, this may be a dynamic sign of positive sentiment building. However, the past two months of trading have been choppy and speculators should not count on a solid trend upwards to suddenly emerge, but they can certainly remain hopeful. Traders who are looking for upside cannot be blamed, yet they should be cautious.
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