GBP/USD: Weekly Forecast 15th January - 21th January

The GBP/USD was rather predictable last week. That is if speculators were prepared with the knowledge that U.S inflation data which was published last Thursday was going to impact Forex. If a trader was not paying attention to this fundamental element and went into the 12^th of December without knowing the U.S Consumer Price Index statistics were coming, things might not have gone so smoothly in the GBP/USD.

The GBP/USD went into the weekend near the 1.22270 ratios, while displaying a slight reversal lower after flirting with highs most of Friday.  A high water mark for the week – and Friday – was accomplished earlier when the GBP/USD traded near the 1.22500 mark momentarily.  Volatility was quite vicious on Thursday and Friday and the price range of the GBP/USD whipsawed. Surviving the turbulent trading for day traders was likely a combination of luck and experience.

The aftermath of U.S CPI Data Caused Predictable Wild Trading in the GBP/USD

Most of last week’s trading in the GBP/USD witnessed a rather consolidated range leading up to Thursday. With the exception of definite outliers, the GBP/USD until early Thursday saw support close to the 1.21100 juncture and resistance close to 1.21900. While it is nice to have known the Consumer Price Index numbers were coming from the U.S. on Thursday and to have been prepared for turmoil, the price action of the GBP/USD was still strong. Even experienced traders likely had moments of doubt during the wild up and down and up Forex action which developed.

• The 1.22000 mark may now look like support for some technical traders, but the fact that this level was penetrated lower on late Thursday and also on Friday leaves plenty of room for other interpretations.
• Traders who wagered on upside price action and profited, should not get overconfident in the coming days and remain cautious as they pursue the GBP/USD. Speculators also need to be aware there is a banking holiday on Monday because of Martin Luther King Jr. day.

Economic Data and Mayhem in the GBP/USD

Having closed out last week with a flourish upwards and close tests of the 1.22500 level on Thursday and Friday without sustaining highs may leave some speculators feeling additional climbs will develop.  From early December until the middle of last month, the GBP/USD actually traded at higher values reaching an apex around the 1.24460 level, but this higher value will likely prove a road too far this coming week. U.S. inflation data came in weaker, but it met expectations and rising prices still remain a concern for the U.S. Federal Reserve. Interest rate hikes may become less hawkish, but concerns linger regarding what the U.S. central bank will do over the next six months.

GBP/USD Weekly Outlook:

The speculative price range for GBP/USD is 1.21300 to 1.23465

Traders who have bullish optimism in the GBP/USD certainly cannot be blamed, but they should remain calm regarding their targets and not be overly ambitious. Support near the 1.22000 is an obvious technical realm for speculators and should be watched early this week. While the GBP/USD has re-confirmed higher values and is within the upper elements of its three-month chart if the 1.22000 level falters and sees sustained trading below it would not be shocking.

However, the 1.21700 to 1.21500 marks could prove durable and this may be an area that cautious bullish speculators favor igniting buying positions if they believe the GBP/USD will recover from those depths and resume its bullish tendencies. If the 1.21400 ratios were to be challenged, yes, the 1.21300 juncture could see a test, but that may prove to be the end of strong selling in the coming days.

Upwards momentum in the GBP/USD has been rather consistent taking a mid-term view. Incrementally the currency pair remains attractive regarding the notion more upwards value will be attained. However, speculating on higher moves remains dangerous and risk management is needed. The first two days of trading in the GBP/USD should be monitored carefully. The absence of many traders on Monday could cause some unbalanced positions because of the U.S banking holiday.