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MENAFN- Daily Forex)
In the wake of a .25 interest rate cut from the bank of England this past Thursday, the GBP went into the weekend near the 1.23905 ratio. The GBP/USD did accomplish a move higher when the whole week of trading is considered. A low of nearly 1.22470 was seen early Monday, this as global Forex traded nervously under the threatened shadow of tariffs from U.S President trump early in day.
Volatility remained a
fashion statement in Forex the entire week and the GBP/USD was no exception. Upon a recovery in the sentiment of
financial institutions on Monday afternoon and into Wednesday the GBP/USD provided upwards momentum and the 1.25000 was proven vulnerable as a solid apex was challenged near the 1.25530 mark. The ability to create a high above the 1.25000 ratio after seeing lows around 1.21000 on the 13th of January was likely welcomed by bullish GBP/USD traders as a good sign.
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However, the move higher in the middle of this past week proved short lived and incremental selling promptly began. By Thursday the GBP/USD was once again near the 1.24000 ratio and by the time the Bank of England was done cutting its interest rate as expected, and delivering a monetary policy statement which was considered too cautious by many financial institutions the GBP/USD dropped further and the 1.23600 level was seen.
Yes, the currency pair was able to provide a dose of buying at the 1.23600 juncture, perhaps proving that support levels are durable there going into the coming week, a high around 1.24700 was seen, with an outlier on a spike higher momentarily being demonstrated near 1.24925 which quick vanished. After the outlier was dealt with and a known range was attained again the U.S jobs data than provided some more nervousness with a higher Average Hourly Wages report likely causing some selling of the GBP/USD's Close and Near-Term Sentiment Considered
The close of the GBP/USD going into the weekend is still below values seen in the days before the Christmas holiday season. The 1.23900 may look oversold to many GBP/USD bullish enthusiasts, but the currency pair is facing headwinds likely created by a rather cautious Bank of England which is not viewed as pro-active.
Nervousness generated regarding Donald Trump's economic policy which is causing Forex traders to look at the USD with notions of risk adverse buying sentiment still should be taken seriously too. The GBP/USD in the middle of last week certainly showed many traders believe the currency pair is oversold, but the search for higher price equilibrium remains fragile.
GBP/USD Weekly Outlook:Speculative price range for GBP/USD is 1.23650 to 1.25100
The U.S will publish important inflation data this coming week, but traders need to consider behavioral sentiment as much as any other factor for the GBP/USD in the days ahead. If the GBP/USD can attain the 1.24000 and sustain this mark early this week it may indicate that financial institutions believe the currency pair should be higher. Support levels near the 1.23800 mark should be watched too, if this level holds early this week, that may be a positive development for the GBP/USD.
However, if U.S Consumer Price Index numbers are stronger than anticipated this coming Wednesday this could create headwinds and potential short-term selling again in the GBP/USD. A look at the past month of trading in the GBP/USD shows the currency pair is within the middle of its range.
The Bank of England surprised very few people last week and financial institutions may believe the current price of the GBP/USD is adequate taking outlook into consideration. While the GBP/USD may look oversold nervous trading may continue to be demonstrated in the coming days. Traders who are looking for upside in the GBP/USD cannot be blamed, but they should not get too ambitious regarding their targets upwards.
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EURUSD Chart by TradingView
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