The GBP/USD provided a whirlwind of gains late last week, as the currency pair responded to data and fiscal rhetoric with an additional bullish run.
The GBP/USD went into the weekend around the 1.20860 ratio, this after fighting for value around 1.18725 on Wednesday the 23rd of November. Prior to making its bull rush upwards on late Wednesday, the GBP/USD had actually performed with a solid result as it sustained value above intriguing support levels hinting that the currency pair would not sink to lower depths.
Economic data on Wednesday via Service and Manufacturing PMI statistics from the U.K and U.S came in with recessionary shadows. And then the U.S Federal Reserve Meeting Minutes were published which underscored the belief among financial trading houses the U.S central bank would begin to soften its tough hawkish interest rate rhetoric.
Upon the publication of the Fed report, it clearly showed that important decision-makers on the central bank committee believe the time is approaching to become more dovish. As soon as financial institutions saw the Meeting Minutes information, the GBP/USD started to be bought with conviction and broke the 1.20000 ratio and sustained value above.
The Trend is Bullish for the GBP/USD but as always Caution should be used
After moving higher with solid price velocity on Wednesday the GBP/USD continued to incrementally climb. However, reversals certainly did start to be seen lower, which produced what could almost be considered a practical showcase of technical trading in a higher price range. On Thursday when the U.S was celebrating its Thanksgiving holiday and trading volumes were quite limited, the GBP/USD did flirt above the 1.21000 mark and touched the 1.21540 level briefly.
- The ability to touch the 1.21000 level and above is significant. However as thin holiday trading became the norm on Thursday and Friday, the GBP/USD did start to see cautious trading take place which means the start of trading this week should be monitored closely.
- As American financial houses climb back into their trading seats, behavioral sentiment will likely be rather volatile on Monday and Tuesday of this week and trading volumes will grow.
Technical Bullish Trend and a Potentially Clearer Outlook regarding Central Bank Policy
The GBP/USD is now trading at values not seen since August of this year. After suffering a dynamic selloff in the midst of U.K government chaos, the GBP/USD has recovered and is now close to its lower price range which it bounced along before the U.K government meltdown. Is the bear trend now officially dead? It might be.
Support levels this coming week should be watched carefully, but if the 1.20000 mark holds this week and next, this may be a solid indicator regarding the GBP/USD for the mid-term. Having gained so extraordinarily well this past Wednesday and maintaining its stronger stance, the GBP/USD should be watched closely. If financial houses really believe the end of the ‘hawkish’ Federal Reserve is in sight, the GBP/USD may be able to sustain its newfound bullish stance.
GBP/USD Weekly Outlook:
Speculative price range for GBP/USD is 1.18720 to 1.22870
Remarkable gains were made last week in the GBP/USD and traders who believe that there will be reversals lower need to be careful. The return of full trading volume early this week will provide an immediate test of value in the GBP/USD, if certain financial houses believe the GBP/USD gained too rapidly. If the 1.20000 is broken lower, the 1.19800 should be watched, if this ratio is challenged it may be normal to see the 1.19500 mark come under pressure. Sellers looking for lower price levels may be overly ambitious particularly if they believe the GBP/USD will sink under the 1.19000 mark again. Stranger things have happened, but a move to a low of 1.18800 would mean something has taken place that is a surprise.
How much higher can the GBP/USD go this week if last week’s upwards price action can be sustained and support levels hold? Certainly in August and July of this year when looking backward at 6 month charts, the GBP/USD was above the 1.21000 level and 1.22000 marks. However, day traders need to be realistic; a one-way route upward is unlikely. Reversals lower are normal even if the GBP/USD is incrementally moving higher. Stop losses and take profit orders remain key trading ingredients. Targets that are within reach and challenge resistance levels may be the best pursuit for bullish speculators.
Ready to trade our weekly Forex forecast? Here are the best Forex brokers to choose from.