On Monday of last week the GBP/USD started out near the 1.36600 ratio, a jump higher after its close the prior weekend. The GBP/USD languished until Tuesday having trading within a typical range, with not much to write about except to say there were murmurs of nervousness in the broad markets.
On Tuesday the GBP/USD suddenly began bolting higher and by late in the day the 1.38700 vicinity was being challenged on a spike higher. People were looking for reasons to explain what happened.
The broad Forex market experienced similar lurches as USD centric weakness hit and financial institutions reacted like humans do with panic. Making news and supposedly the chief culprit of impetus was a reaction to President Trump’s comment that he was not overly concerned by a weaker USD. However, after the highs attained in the GBP/USD and by other major currencies versus the USD in the middle of the week, some calm prevailed, and slightly lower ratios started to be traversed.
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U.S Federal Reserve and New Developments
The GBP/USD went into the U.S Fed FOMC meeting testing the 1.37700 to 1.37900 realms depending on what minute of the day it was. Volatility was certainly looming in Forex and traders were reacting fast. The Fed surprised no one when it remained cautious. The biggest question about the Fed’s leadership however, did get an answer when President Trump put forward Kevin Marsh’s name as the next Fed Chairman on late Thursday and Friday. This news confused the marketplace as analysts competed to be the first to be heard, while largely not saying anything insightful.
On Friday the GBP/USD traded around a high of 1.38700, this as Forex again showed volatility, but also signals that the USD was strengthening were developing. People who knew Kevin Marsh’s history started to point out that he was an associate of Scott Bessent and could be seen as an independent thinker when it comes to interest rate policy. Clearly Kevin Marsh still has to be officially approved in order to run the Fed, so financial institutions that now have outlook may feel more comfortable as this coming week begins, but after the past couple of week this is saying a lot and there are no guarantees.
Economy and Influence in a USD Centric World
The downturn of the GBP/USD going into this weekend still left the currency pair within the higher elements of its one month, three and six months and longer price range.
- In fact the GBP/USD is within values as of this weekend that it last traversed in the last week of June and into the first week of July 2025.
- The GBP/USD must be treated carefully, along with the broad Forex market that is showing signs of volatile trading that have been missing for a long time.
- Day traders need to make sure they are using solid risk taking tactics as they make decisions on short-term trends.
- While many analysts tried to correlate the sudden weakness of the USD to economic data, trade agreements and fiscal policies, speculators should remember behavioral sentiment still moves largely on instinct and fear.
GBP/USD Weekly Outlook:
Speculative price range for GBP/USD is 1.35770 to 1.38110
Picking a direction in the GBP/USD as the week begins for speculators without deep pockets is not going to suddenly become safe. Volatility is likely to remain part of the marketplace. Over the long-term some people believe the Federal Reserve will try to lower interest rates, President Trump would certainly like to see a lower Federal Funds Rate. The ability of the GBP/USD to gain since touching the 1.34000 vicinity on the 21st of January has been solid.
The upwards energy seen last week, including velocity, was dynamic. The results and new highs created by spikes however quickly evaporated, many traders who had big gains in their accounts – including experienced speculators – saw profits vanish as the GBP/USD reversed lower. Last week was a solid reminder to use price targets and be satisfied with gains and to cash out of the market when they are attained, because if not the reversals can cause a lot of anxiety and pain. GBP/USD should be ready for more tests this coming week, picking a direction near-term may be quite challenging.
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