(MENAFN- Daily Forex) The GBP/USD suffered from additional selling momentum this past week as financial institutions demonstrate their negative near-term behavioral sentiment.
The GBP/USD pair went into the weekend near the 1.26404 ratio, the currency pair began last Monday near the 1.26860 ratio. The GBP/USD did ebb higher starting last week and managed a high around the 1.27405 mark on Wednesday, perhaps helped when the Consumer Price Index met expectations in the United Kingdom with a gain of 2.0% via the broad annual outcome. However, this momentum upwards was effectively shut down and the currency pair started to incrementally selloff going into Thursday.
The Bank of England did not change their Official Bank Rate; no interest rate cut was expected. And even though the BoE suggested strongly a cut to the Official Bank Rate is likely to be seen late this coming summer and perhaps even again by the end of the year, the GBP/USD suffered more selling. As Thursday ended the GBP/USD was selling below its starting ratio from Monday of the past week/USD Short-Term Frustrations and Mid-Term Unknowns
It should be remembered the GBP/USD was trading near the 1.28600 level on the 12th of June, this as financial institutions were betting on more dovish rhetoric from the U.S Federal Reserve, but that didn't exactly happen. The GBP/USD has suffered the past couple of weeks on a lack of clarity regarding the next time the U.S Fed will cut its interest rate, the potential for a landslide victory for the Labour Party in the coming U.K election on the 4th of July is also certainly causing headwinds.
Yes, the GBP/USD had reached a speculative high level in the second week of June and it has been punished with selling likely based on the consideration financial institutions had wagered with too much bullish optimism. However, the move lower now has to be called into question. While the short-term is likely going to remain volatile over the next two weeks, some traders with mid-term outlooks may believe the GBP/USD has been oversold. However, this notion of being oversold before the results of the U.K election are known is clearly a speculative approach too, particularly for short-term traders.
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GBP/USD Trading Intrigue and a Cautious Approach
It is highly recommended that short-term traders of the GBP/USD take a conservative approach to the currency pair this week. Behavioral sentiment because of political intrigue in the U.K, France and the U.S are all affecting short term emotions and may continue to spark rather fast nervous reversals.
Support and resistance levels this coming week may continue to prove difficult to factor.
The GBP/USD is essentially testing values it has last seen since the middle of May. The selling demonstrated on Thursday and Friday this past week proved support levels were vulnerable, this as financial institutions are showing a rather large amount of nervousness and these emotions will not disappear over the coming week. Traders are advised to remain cautious and look for quick hitting trades that take advantage of prevailing short-term technical trends.
GBP/USD Weekly Outlook:Speculative price range for GBP/USD is 1.25760 to 1.27100
The price velocity downwards seen in the GBP/USD since touching a near-term high last Wednesday is a signal that selling pressure is strong. The opening for tomorrow and into Tuesday of this coming week should be monitored closely. Forex pairs including the GBP/USD have seen choppiness which has been a factor since the start of this year, this as global financial institutions react to a whirlwind of murky economic data, reactive central banks which appear trigger shy about cutting interest rates quickly, and the growing noise from diverse political winds.
The GBP/USD support levels should be watched and if selling pressure suddenly challenges the 1.26300 to 1.26200 levels, this may spark additional worries about short-term selling pressures being strong. Choppy trading has been evident in the GBP/USD over the mid-term, and the short-term is likely to continue to display nervousness. While some speculators may feel the GBP/USD has been oversold, a look at three and six month charts shows the currency pair has traversed lower. This coming week looks rather speculative and day traders should be alert.
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