GBP/USD: Weekly Forecast 30th October – 5th November

U.K Government Creates Positive Trading Sentiment.

The GBP/USD continued to attack new highs towards the end of last week, as the U.K government actually managed to have no major missteps.

The GBP/USD will enter trading this coming week with a positive dose of speculative fever swaying over its landscape.  The U.K government managed not to create a major change of policy in the past week and for the moment the current new leadership actually looks like it may last longer than a month. While that is certainly meant to be sarcastic, it does highlight the rather unbelievable stretch the GBP/USDS has seen the past two months with rather negative media coverage hovering over the U.K government.

The GBP/USD went into the weekend showing it has the ability to sustain its short term higher values near the 1.16100 ratio, this is a far cry from the lower depths challenged in the weeks past. Before traders get completely too ambitious about the GBP/USD they should note the U.K government is not out of the woods yet, and the public will count on the new leadership to deliver solid economic outcomes. Good economic results may remain challenging in Britain and elsewhere over the mid-term.

The GBP/USD has burst higher on the belief it was vastly oversold

However financial institutions within Forex, particularly among the major currency pairs like the GBP/USD are often making long term wagers. Yes, corporations have to execute daily transactions where the value of the forex pair frequently is thought about but not the guiding ‘light’, because invoices need to be paid. Retail traders often must make short term bets, folks with deeper pockets can keep trades on for quite some time.

But financial houses also know what is coming down the road over the next half year and they do tend to position for what they believe will be direction. Speculation while not talked about loudly in financial houses do consistently see banks and investment houses wager on their behavioral sentiment outlooks.

  • If the GBP/USD can maintain the 1.16000 mark early this week and show that buyers remain in the trading waters, this could spark speculative intrigue which causes the currency pair to continue challenge highs again seen last week.
  • Traders should not be overly ambitious, because fundamental concerns remain, and the U.K has plenty of economic clouds on the horizon.  If the 1.16500 level comes within sight some traders may see this as too high considering the past week of results.

The coming week of trading for the GBP/USD will likely remain Volatile

Traders need to be ready for a rather turbulent mix of short term positive sentiment and prepare for those who want to continue to point fingers and say the GBP/USD should remain under pressure. The U.K government will try to deliver more calm and has postponed it next large fiscal policy statement until the middle of November, but that could change quickly if politicians combat each other for the microphone.

GBP/USD Weekly Outlook:

Speculative price range for GBP/USD is 1.13990 to 1.18100

Speculators should monitor the GBP/USD carefully.  The forex pair has certainly seen a solid dose of buying emerge in the past week and a half. However reversals lower are likely to be seen too as reactions and natural cycles filter in the week’s trading. If the GBP/USD falls below the 1.15800 ratio it could spark some concern among those aiming for higher realms and force additional selling. A move below the 1.15000 level would certainly strike some fears and some traders may believe the 1.14450 would then have to be watched.

Optimistic traders should be careful. While the trend often proves to be the friend of speculators, the golden goose does have to take a break every so often. And this trend up has not been a long one, in fact it really only started on the 21st of October, this after the GBP/USD flirted with the 1.10700 mark briefly. If the GBP/USD can hit the 1.17000 ratio higher, this would be quite an accomplishment, a rise to 1.18000 may raise suspicions things are far too positive however. Traders should be willing to cash in profits if they materialize, and not let them vanish while wagering the GBP/USD is going to produce a sustained climb. It actually might, but the ride is likely to be bumpy short term.

GBP/USD

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Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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