GBP/USD: Weekly Forecast 20th – 26th November

Stronger Pace Sustained as Holiday Trading Awaits.

The GBP/USD saw additional bullish price action develop the past handful of days, and enters this week having sustained a solid incremental move upwards.

The GBP/USD entered the weekend near the 1.18870 vicinity and was able momentarily to achieve a high of nearly 1.20325 on Tuesday the 15th of November. While the GBP/USD was not able to maintain a one way direction upwards, the currency pair has certainly shown the ability to establish a higher price range. The GBP/USD finished with a higher weekly close once again and the Forex pair flirting with values not seen since the third and fourth weeks of August.

Retail Sales figures from the U.K came in slightly stronger than expected this past Friday. Yes, on Thursday of last week, the Autumn Forecast Statement continued to warn Britons that tough economic days were ahead. However, the government did manage to put a positive spin on a tax hike by saying spending would be curtailed. In the U.S Existing Home Sales came in with another monthly decline on Friday.

Economic Data Unclear but Hints of Less Inflation Bolstering Bullish GBP/USD Speculation

Statistics regarding inflation continue to show an upward trend, but intense increases in consumer goods seem to have lessened. While this does not help folks buying retail goods, it may help the U.S Federal Reserve back away from its extreme hawkish viewpoints and ease their policy into a more dovish framework. However, there are no guarantees and in fact the weakness the USD has shown the past couple of weeks have begun to stabilize.

  • The U.S has its Thanksgiving holiday this Thursday, which means trading volume within financial institutions will start to slow on Wednesday. Thin transactions of Forex trading will be seen across the board including for the GBP/USD later this week.
  • However this coming Wednesday, there will be plenty of U.S data. How will markets react to the statistics? Because of light trading volumes, spikes could arise for the GBP/USD with sudden large orders depending on the outcomes via the U.S manufacturing, service and Core Durable Goods Orders reports.

A Slightly Bullish Incremental Climb was Demonstrated Last Week in the GBP/USD

After achieving highs early last week when the GBP/USD climbed over the 1.20000 ratio, there was a reversal lower.  However the selling which was displayed was not overtly violent and support became durable around the 1.17900 mark. Yes, the GBP/USD did fall to nearly 1.17620 on Thursday, but the currency pair was then able to muster another dose of buying which put its value within the higher realms of its mid-term range again. Before going into the weekend the GBP/USD challenged the 1.19500 vicinity a few times before selling off slightly.

GBP/USD Weekly Outlook:

Speculative price range for GBP/USD is 1.16610 to 1.20550

After making substantial gains the past few weeks, the GBP/USD has seen upwards momentum lessen. However, the upwards climb and creation of a seemingly higher mid-term price range should get the attention of traders. It would be wishful thinking to believe the GBP/USD is going to recapture the value it has lost over the past year with a huge dynamic burst upwards within only a month of time.

Plenty of dark economic shadows continue to exist and fragile market sentiment remains abundant. Incremental climbs have certainly seen bursts of selling. Support does look strong near the 1.17900 level, but if it were to weaken the 1.17800 to 1.17700 should be watched. A move below the 1.17500 ratio would be surprising, but because of lighter than normal trading volumes which will develop later this week, traders should be braced for momentary spikes which may make no sense except to acknowledge a large order has hit the GBP/USD market.

Traders who want to speculate on upwards momentum being exhibited cannot be blamed, but caution is advised in the coming days. Wednesday’s manufacturing, services and Core Durable Goods figures from the U.S will affect sentiment, and thus speculators will want to be wary of sudden surprises emerging. If support levels near the 1.18000 hold, the GBP/USD could certainly continue to incrementally move higher.

If the 1.19000 mark is penetrated early this week, traders should expect a dose of resistance again to emerge near the 1.20000 level. In the meantime, it may continue to be worthwhile to buy the GBP/USD, but traders should not be overly ambitious and use take profit orders to cash out winning positions. Traders need to remember this coming Thursday and Friday will see ‘odd’ Forex markets develop with the absence of American financial institutions.

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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