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GBP/USD: Weekly Forecast 5th November - 11th November

The last time the GBP/USD traded above the 1.24000 mark was in the third week of September.

The GBP/USD will go into this week of trading near the 1.23775 level, which is a good polite distance away from lows that were seen last Monday when the currency pair hit the 1.20900 vicinity. Solid and durable support equilibrium last week was technically efficient and the price of GBP/USD incrementally gained on Tuesday, late Wednesday, and Thursday and then surged higher on Friday. Yes, reversals lower for the GBP/USD certainly occurred, but speculators who were fortunate enough to be buyers may have produced a rather profitable week.

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    The GBP/USD is not out of the woods quite yet regarding technical perspectives and lows per glances at three and six-month charts. However, Friday’s finish higher crossed a one-month threshold and put the GBP/USD at a solid value considering the past handful of weeks. Traders who have been sellers of the GBP/USD since July of this year may want to consider the potential that evidence for a shift in behavioral sentiment may be underway.

    Yes, there are plenty of reasons to remain risk-averse for traders who feel the GBP/USD could drift lower still, but the U.S Federal Reserve’s pause last week and the notion the U.S central bank is nearing the end of its rate hike cycle may help fuel buying of the GBP/USD. The ability to surpass the 1.22000 value on Thursday of last week and hover near this level was a solid indication for buyers. And when U.S jobs numbers, including its inflation report via the Average Hourly Earnings, came in weaker than anticipated on Friday this created fast upward momentum.

    The 1.23000 Level for the GBP/USD and the Coming Week of Trading

    It is going to be a relatively quiet week for economic data from the U.S. this week, but on Friday the U.K. will publish its GDP numbers. Last month’s results were slightly better than expected, but lackluster growth and perhaps even recessionary pressures remain concerns for Great Britain. The outcome of the Gross Domestic Product statistics at the end of this coming week could prove to create a brief spark in the GBP/USD.

    But it is likely the real impetus for the GBP/USD in the coming days will be via risk appetite and its battle with adverse sentiment. The sudden and rather strong upturn in U.S equity indices last week was a positive sign for the broad markets globally, and more important was evidence that U.S Treasury yields started to decrease. If financial institutions remain calm and continue to be buyers this week in equity markets, this could be a signal the GBP/USD may sustain the 1.23000 level. If the currency pair can maintain its gains tomorrow and Tuesday without violent reversals lower, this could ignite more buying action of the GBP/USD in the near-term.

    Lower Part of Mid-Term Range for GBP/USD a Caution Sign

    • While the GBP/USD definitely gained on Friday, its price action remains within the lower boundaries of its mid-term value realms.
    • One day of bearish sentiment could push the GBP/USD back to important technical lows.
    • However, if behavioral sentiment remains tranquil in the global markets, reversals lower could prove to be attractive buying opportunities if support levels prove durable.

    GBP/USD Weekly Outlook:

    Speculative price range for GBP/USD is 1.22090 to 1.25070

    The ability of the GBP/USD to push higher may prove attractive to potential buyers of the currency pair. Yet Friday’s surge higher may get tested early on Monday and it will be important to watch the GBP/USD results over the coming two days. If the 1.23000 level can be maintained, this could be an indication financial institutions still view the GBP/USD as being oversold and may be wagering on potential upside price action to build. If the currency pair does move lower support near the 1.22500 should be considered important regarding short-term sentiment, if this mark proves vulnerable it likely means risk adverse conditions are nervous and the 1.22300 to 1.22100 ratios could be tested.

    However, the GBP/USD is trading at one month highs and the next important mark upwards will likely prove to be 1.24000. If this level can be challenged and penetrated higher speculators while wanting to look for additional highs should remain cautious regarding their targets and not get overly ambitious. The last time the GBP/USD traded above the 1.24000 mark was in the third week of September. If the GBP/USD sustains a move above this level it will mean risk appetite is making itself known in the global markets.


    Robert Petrucci
    About 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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