The GBP/USD traded slightly below the 1.19600 ratio last Tuesday and then began a reversal higher and came within the 1.21920 vicinities on Thursday. The GBP/USD will open this week near the 1.20475 mark and traders who survived the battles of pursuing the currency pair may actually feel prepared for the days ahead.
Having produced a rather robust low early last week, the GBP/USD turned higher and then experienced a reversal lower which may have tested the fortitude of many speculators. However, technical and fundamental traders may believe a strong line of durable support has been demonstrated.
The stronger-than-expected U.S jobs numbers from nearly ten days ago are still casting a shadow of doubt on Forex and bolstering the USD against many major currencies. However, the strength of the USD may have been too strong. Certainly, there are no guarantees in speculation, but there is a notion that risks can be compared to potential rewards. The ability of the GBP/USD to show that the 1.20000 level appears to remain viable as support needs to be considered. Technically the ratio of 1.20000 GBP/USD may prove to be an important psychological level.
Fundamentally the weaker-than-expected Gross Domestic Product statistics from the U.K published this past Friday could be interpreted as a negative for the GBP moving forward, but is it? Tough economic conditions not only are in front of the U.K., but the U.S., Europe, and Asia as well. Global central banks are still fighting inflation and are showing signs of having trapped themselves with their own policies.
U.S Consumer Price Index this coming Tuesday will move the GBP/USD
While the U.S Federal Reserve continues to look into the past and worry that U.S employment data was too strong, this Tuesday the U.S CPI numbers could prove to be vital for Forex including the GBP/USD. Having come within sight of the 1.21920 ratio on Thursday, the GBP/USD showed that bullish sentiment still exists for the currency pair and some upside potential additionally may be seen.
- If the CPI data from the U.S. meets or comes in below expectations, this could prove that U.S inflation is lessening and perhaps give the Federal Reserve room for consideration to moderate their interest rate policy in the months ahead.
- U.K. employment data will be published on Tuesday also, but it is U.S data via inflation and retail sales which will serve as fundamental fuel for the GBP/USD in the days ahead.
Support near the 1.20375 mark should be Monitored Early this Week
Having produced a difficult and choppy range last week, the GBP/USD may appear dangerous to speculators. However, if support levels near the current values of the currency pair remain durable this could ignite additional bullish speculative bets in the GBP/USD. If the 1.20375 holds Monday and remains an inflection point technically going into Tuesday’s important U.S. economic data, this may be an intriguing spot for the GBP/USD to react.
GBP/USD Weekly Outlook:
The speculative price range for GBP/USD is 1.19850 to 1.23060
Traders who want to look for the downside in the GBP/USD should use narrow take profits and not be overly ambitious regarding their selling wagers. Aiming for short-term reversals lower cannot be blamed, but speculators need to be careful of the inflation data released on Tuesday from the U.S.
Before and after the publication of the CPI results the GBP/USD is likely to become fast and price velocity could prove dangerous for day traders with shallow pockets. If the U.S. inflation data comes in stronger than expected, then it would not be surprising to see the GBP/USD selloff and test values below the 1.20000 mark.
However, if the Consumer Price Index statistics from the U.S. show inflation is continuing to weaken, the GBP/USD could see strong bullish activity. Traders looking for an upside should remain realistic and use solid risk-taking tactics. The 1.20600 to 1.20750 realms above could prove attractive. If those values have already been toppled and U.S. inflation numbers are weaker, the 1.21000 level and above could prove to be targeted quickly. Having come within shouting distance of the 1.22000 ratios last Thursday, the GBP/USD could challenge this mark again if U.S economic data create a stir for the currency pair.
