GBP/USD Weekly Forecast - 07/07: Bullish Wager (Chart)

(MENAFN- Daily Forex) The GBP/USD has turned higher and is within the upper part of its mid and long-term technical charts once again, having gone into the weekend near the 1.28120 ratio.

• Friday's trading in the GBP/USD pair produced solid gains early and managed to go into the weekend extending the climb.
• The Labour Political party in the U.K won by a resounding amount, and it appears that financial institutions which exhibited a great deal of nervousness until the last week of June suddenly were bullish because they have clarity.
• The GBP/USD was also helped by rather lackluster jobs numbers from the U.S being published on Friday.

Before speculators start to bet blindly on more upwards momentum to follow by the GBP/USD, they should acknowledge last week's trading did not have large U.S financial institutions participating in much of the price action. Sideways values were demonstrated on Thursday during the Independence Day holiday in the U.S, and the climb higher may have been sparked by British firms on Friday who were reacting to the U.K election results. Monday and Tuesday's trading should be watched closely to see if resistance levels start to prove durable.

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1.28000 Level as a Healthy Equilibrium and Behavioral Sentiment

The U.K economic picture has not suddenly become sunny. Data from the U.K is rather weak, and to achieve growth and lower inflation will need patience. The outlook remains cloudy for Britain. U.S economic data however doesn't appear much brighter. GDP numbers in the U.S have been eroding steadily and now it is a question about what inflation will do in the U.S which financial institutions will gear towards.

And on the schedule this week are CPI numbers this Thursday, and PPI data on Friday from the U.S, which will certainly cause reactions in Forex and the GBP/USD. Having attained the 1.28100 level going into this weekend, which is retesting highs seen on the 12th of June will likely be taken as a positive by many GBP/USD traders, but can the values be sustained? On the 12th of June the currency pair touched the 1.28600 vicinity only to see a strong selling trend emerge. In the second week of March the current GBP/USD values were also seen, but also produced selling. The coming week of price action will prove interesting combined with U.S inflation data on the schedule and Reality Might Clash in the GBP/USD

The emergence of the bullish trend in the GBP/USD has been sudden. The currency pair touched a low of nearly 1.26196 on Tuesday of last week. The ability to move higher quickly happened in the aftermath of the U.K election results, but intriguingly the U.S jobs numbers did not cause a reversal lower going into the weekend. This may signal financial institutions are still leanings towards the prospect of interest rate cuts from the U.S Federal Reserve and some may be hoping the Federal Funds Rate can be cut in September.

• There is also the prospect of the Bank of England potentially turning dovish over the next couple of months.
• Optimism and behavioral sentiment may be anticipating a stronger GBP/USD, but resistance levels this week will prove an interesting barometer regarding mid-term outlook.
• Day traders should be careful early this week because volatile conditions will be seen.

GBP/USD Weekly Outlook:Speculative price range for GBP/USD is 1.27760 to 1.29100

Having finished last week at highs is intriguing and technical resistance may be put to a quick test. Day traders who are cautious might want to sit on the sidelines for the first couple of hours on Monday and see where the London market upon opening takes the GBP/USD. Optimism may remain strong regarding the potential of the GBP/USD to go higher, but resistance levels around the 1.28500 should be watched, if this level is penetrated higher and sustained it may mean speculators remain bullish and might be positioning for the Consumer Price Index Thursday results from the U.S. If the U.S inflation numbers come in near expectations or weaker, this could propel the GBP/USD higher.

But before bullish traders of the GBP/USD get too feverish, they should look at long-term charts and notice the highs being challenged currently are near the upper realms. However and oddly enough, the GBP/USD was almost at the identical values it is currently this time last year. Bullish traders may believe there is a little more upside to explore. Day traders should remain conservative though and practice solid risk management this week.

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