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MENAFN- Daily Forex)
- Bullish speculators of the GBP/USD may be in a relatively good mood after the past week and half of trading in the currency pair.
- The ability of the GBP/USD to hold ground above the 1.26000 level is likely seen as a positive result.
- The currency pair touched a high of nearly 1.26775 on Thursday and Friday before giving back some of its upwards values.
- The GBP/USD has essentially been clinging to the 1.26000 level and above since the 14th of February.
Since trading below the 1.21000 mark on the 13th of January briefly, the GBP/USD has shown incremental strength. Financial institutions have been able to show their belief the GBP/USD was oversold and the past week and a half of trading has started to show signs of equilibrium within a higher price range. From the middle of November until the middle of December the GBP/USD traded near its current values, while showing some momentum even higher that surpassed the 1.27000 level in the second week of December.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Narratives and Behavioral Sentiment in the GBP/USD
It is likely not a coincidence the GBP/USD has struggled since mid-November, not only is this when Donald Trump began to make his economic policies known and said how he would enact his plans, but is also when central bank implications began to take shape and cause headwinds. However, the past month has seen financial institutions begin to react to the selloff across Forex, including in the GBP/USD and start to show signs of pursuing buying against the USD, at what may be considered discounted prices.
Certainly there are risk events ahead for Forex and the GBP/USD. Today's results from Germany's election will cause a reaction to the EUR/USD tomorrow, but it will also have an effect on the GBP/USD. Also there will be Gross Domestic Product data from the U.S on Thursday of this week. These two events together will cause movement for the GBP/USD throughout the week. Wall Street trading should also be kept an eye on to see if selling continues. The narratives and their effect on Forex can be questioned, but behavioral sentiment is certainly paying attention to these developments 1.26000 and Perception of Fair Market Value
The perception that 1.26000 is a healthy level for the GBP/USD remains a factor in financial institutions. The ability of the GBP/USD to remain highly valued against the USD is not going to fade over the mid-term, but fair market price for the currency pair is a legitimate question.
- The U.K continues to face a difficult economic outlook and its data remains lackluster.
- The Bank of England has not been a bastion of pro-active policy and this has also hurt the outlook for the GBP/USD via headwinds.
- If the GBP/USD can maintain values above the 1.26250 level early this week, particularly after the results of the Germany election are known this may be a sign that buyers still lurk.
GBP/USD Weekly Outlook:Speculative price range for GBP/USD is 1.25200 to 1.27200
While some traders may believe the German election result should not affect the sentiment of GBP/USD traders, there could be some nervous reactions if surprises are seen early on Monday. If the GBP/USD is able to maintain its current price range and withstand choppy nervous selling early, financial institutions may believe more upside is attainable.
If the 1.26300 to 1.26400 levels remains durable as support, then more buying could be produced – this if risk appetite remains part of the overall market sentiment. Nervous results from the U.S on Wall Street may have played into some of the selling late on Friday via the GBP/USD. If Wall Street remains under a selling influence early this week, this could put some more pressure on the GBP/USD via risk adverse sentiment rising.
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EURUSD Chart by TradingView
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