The GBP/USD experienced a rather choppy week of trading as its value tested higher support and resistance levels, while remaining in the higher elements of its mid-term price range.
- The U.K will hold its general election on the 4th of July.
- This announcement was made this past Wednesday and GBP/USD reacted with a bit of sudden price velocity, but having weathered the surprising news from the Conservative government, the GBP/USD held onto the higher elements of its mid-term range.
- The GBP/USD closed trading for the week near 1.27345.
The high for the GBP/USD touched around 1.27600 on Wednesday. The low for the currency pair occurred this past Friday, when a momentary selling eruption touched the 1.26750 mark – but support for the GBP/USD saw a lot of action around 1.26920 over the week. Importantly there will be a banking holiday in the U.K and U.S tomorrow, which means the GBP/USD will be very lightly traded until Tuesday, in fact most of Forex will see lighter than normal trading volumes early this week.
GBP/USD Upwards Trend Maintained and Resistance Levels Considered
The GBP/USD has climbed higher the past two weeks in a rather incremental manner and correlated to the broad Forex market as USD centric leanings have turned weaker. The Federal Reserve however this past Wednesday issued its FOMC Meeting Minutes which highlighted it is still concerned about inflation, but financial institutions have known this and their selling of the USD has been visible. The question many day traders now have is if the bearish sentiment in the USD will continue or if it will start to show less power.
The combination of the U.K election being called for and only a bit more than one month away will certainly impact outlook on the GBP/USD in the short and mid-term. The potential result for the election seemingly suggests the Conservative government could lose. Financial institutions will certainly have to brace for the prospect for a change in U.K fiscal policy. However, there are enough variables and complex scenarios within Forex and the GBP/USD which makes predicting a trend rather difficult in the short-term. The GBP/USD high touched on Wednesday had last been seen on the 21st of March, this as the currency pair was in the midst of a selloff.
U.S Economic Data and Behavioral Sentiment in the GBP/USD
Although this week will begin extremely quiet because of the U.K and U.S holidays, the GBP/USD will get a strong jumpstart this coming Thursday when the U.S Preliminary GDP numbers are published. The last growth report from the U.S came in below expectations and if these GDP statistics also prove weaker, this could spark additional USD weakness.
- Behavioral sentiment in the GBP/USD leading up to Thursday’s economic reports will serve as a barometer for existing technical perceptions.
- Trading in the GBP/USD is likely to be rather choppy leading up to the U.S Gross Domestic Product numbers.
GBP/USD Weekly Outlook:
Speculative price range for GBP/USD is 1.26875 to 1.28050
Trading tomorrow in the GBP/USD should be avoided and speculators attempting positions need to understand fills could prove dangerous in a very limited Forex market. Tuesday and Wednesday’s trading will certainly see plenty of price action and traders may anticipate that resistance levels will prove rather durable leading into the U.S growth data this Thursday. Support levels near the 1.27200 should certainly be watched, if this level remains strong and the price of the GBP/USD actually remains around the 1.27300 mark or thereabouts, this could mean some financial institutions are still leaning towards a stronger GBP/USD.
Yet, any movements beyond last week’s highs would likely have to be sustained with solid impetus for the currency pair which may only come if U.S economic data is weaker than anticipated and suggests the U.S Federal Reserve will have ammunition to begin considering a more dovish Federal Funds Rate policy. Thursday and Friday of this coming week could prove volatile if a combination of U.S economic data results begins to mix with nervous sentiment about the U.K election which will get more attention as the days go by.
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