GBP/USD Forecast: Weekly Forecast 6th – 12th November

The GBP/USD displayed another week of volatility which likely caused surprises which were both good and bad for speculators pursuing the currency pair.

The GBP/USD has delivered another week of rather nasty volatile results for speculators who like to trade one of the world’s most famous currency pairs. Whipsaw like price action probably caused plenty of harm to speculators unprepared for the rather steep swings in value which also sparked solid reversals. Rather than being a polite and quiet Forex pair that a speculator can pursue with tranquil results, the GBP/USD fell and rose as nervous sentiment reacted to data and central banking policy.

The GBP/USD will begin this coming week significantly below its starting point last week. Tomorrow’s opening should be watched carefully to see where behavioral sentiment takes the GBP/USD next. The starting point will be around the 1.13728 realm upon opening, but speculators should count on fast conditions to remain dynamic in the near-term.

Central Banks were Noisier than Expected Last Week and the GBP/USD Responded

On Thursday, after the Bank of England’s interest rate hike and rhetoric that the U.K is in recession and the public should expect tough economic months ahead, the GBP/USD sank like a stone to the 1.11450 vicinity. This happened after Wednesday’s price action which remained almost calm when the U.S Federal Reserve said it will continue to remain rather hawkish regarding interest rate policy. Instead of offering tranquil words for financial houses, both the Federal Reserve and Bank of England rattled sentiment and left traders feeling more uneasy about outlook.

  • On Friday the GBP/USD did recover and climbed back to nearly the 1.14000 level before giving up some value and going into the weekend.  Early last week – on Monday – the GBP/USD did trade above the 1.16000 juncture briefly.
  • Storm clouds on the horizon and behavioral sentiment could affect the GBP/USD this week once again.

U.S Mid-Term Elections are this coming Tuesday and Results will Cause a Reaction

U.S mid-term elections will take place on Tuesday and it appears the Republican Party in the States may recapture control of the Congress and Senate. What this means for U.S economic policy is unclear, but it may mean that a shift in government stimulus policy will slow down, which investors may be keen to see. However, the vote needs to happen first and if the Democrats hold onto power in Congressional halls, this may create further worries. On Wednesday morning a solid idea will be known regarding where power is situated. Financial houses tend to like when Washington has a White House ruled by one party and Congress is ruled by another. This mixed result could actually create more calm for the GBP/USD, but will it happen?

GBP/USD Weekly Outlook:

Speculative price range for GBP/USD is 1.11470 to 1.17450

Having touched a fast and volatile low of nearly 1.11450 last week, traders know this depth can happen again.  However, the thought process that this number may act as a very durable support barrier may prove to be logical. Certainly the GBP/USD has traded below this value in the past couple of months, but in the coming week, speculators may feel that targets of 1.13000, 1.12750 and 1.12500 below are justified. If the GBP/USD sells at these depths it would seem to be oversold. Traders may use these values as a place to ignite buying wagers while looking for upside reversals.

Nervous conditions are quite strong and the results of the GBP/USD may continue to demonstrate this fragile sentiment.  However, from a speculative point of view for betting on the GBP/USD, it would seem anything below the 1.12400 mark should raise suspicious eyebrows technically. Yes, the GBP/USD has traded lower as already noted, risk management will be essential.

Speculators aiming on moves upward should remain realistic. Targeting results above 1.15500 may be a stretch too far, but limited buying pursuit seems justified from a speculative point of view. Financial houses based on the volatile and choppy conditions last week are still likely looking for ‘fair’ equilibrium in the GBP/USD and may believe the price should be slightly higher.

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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