GBP/USD: Weekly Forecast 23th April - 29th April

The GBP/USD actually finished last week with gains compared to the previous week’s end, but daily volatility remains a challenge for day traders.

Another week of downs and ups has been produced in the GBP/USD and likely has caused some headaches for day traders. A consistent test of values within a known price range certainly creates opportunities for speculators, but being on the wrong side of the results is frustrating, highlighting the need for risk management.  Traders will certainly be listening for clues regarding the U.S Federal Reserve’s FOMC Statement, but this announcement is not coming for another week and a half.

Important U.S Data will come from the U.S this Week and Make the GBP/USD Turbulent

The past two weeks have produced rather bouncy results in the GBP/USD, as financial institutions seemingly work within the currency pair’s price range until more insights are given from the U.S. Federal Reserve regarding its mid-term outlook on interest rates. But don’t be tricked folks, most financial houses already have priced in a hike for the 3rd of May of 0.25%, and some have anticipated another increase in June. There is important U.S data this week which may actually tilt behavioral sentiment regarding the long-term, but that remains a tricky consideration.

Day traders may not be able to trade with long-term intentions, but if they pick the correct side of a momentary trend being created by a large financial institution, short-term wagers then certainly can turn rather positive. The GBP/USD intriguingly didn’t touch the 1.25000 mark the past week, but also importantly its price action towards lows didn’t go beneath the previous week’s results. The GBP/USD actually demonstrated a tighter value band, but its ability to exhibit swift changes in direction remains disturbing and costly for the unprepared.

Consolidation in the GBP/USD could grow, but the ‘Tight’ Price Range isn’t Secure

  • The daily movement of the GBP/USD will react to U.S data this week.
  • Tuesday will see the CB Consumer Confidence results, Advance GDP will be published on Thursday. On Friday the Core PCE Price Index will provide insights about inflation.
  • Stronger than expected results could signal the Fed will have to not only raise interest rates in May, but in June also.

The ability of the GBP/USD to actually finish last week with a higher value than the previous one is a dynamic sign, financial houses may believe the Fed will have to tap the breaks on interest rates sooner rather than later. However, the question is if a potential June interest rate hike has been priced into the GBP/USD currently. Better than anticipated consumer numbers on Tuesday, and stronger growth numbers this coming Thursday could cause the GBP/USD to sell off before Friday’s inflation statistics. The consolidated price range of the currency pair could become more volatile as the week progresses.

GBP/USD Weekly Outlook:

The speculative price range for GBP/USD is 1.23640 to 1.25220

The GBP/USD finished last week with some upside momentum, but it certainly didn’t challenge the highs produced on Wednesday and Thursday.  Cautious traders should monitor the opening of the GBP/USD to see where behavioral sentiment takes the currency pair upwards as early trading is digested into Forex. If an early challenge of highs is produced this would be an interesting development because of the caution displayed earlier on Friday when a selloff took the GBP/USD to a low of nearly 1.23680 which came within sight of lows on late Monday around the 1.23530 level.  Reversals all of last week were a key element in trading.

If selling takes the GBP lower and tests the 1.24200 to 1.24050 ratios quickly, it could mean nervous sentiment might retest lows from last week. The consolidated price range produced recently may continue to be displayed, but Thursday’s U.S growth numbers via the Advance GDP could shake the GBP/USD loose from its tight range. 

Traders tempted to look for strong bullish behavior this week should take into consideration that the GBP/USD ran into rather durable headwinds recently and they may continue. While the GBP/USD may have strong backers who believe it should be valued more highly, current conditions may not allow for a re-emergence of its bullish run higher this week to new altitudes. Buying the GBP/USD when support levels are touched may continue to produce the best wager for speculators.

GBP/USD

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.