GBP/USD Weekly Forecast: Central Banks Prepare To End Emergency Measures

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• Central banks are heading to a more restrictive policy.
• The Fed and the BoE are paving the way towards leaving the emergency measures behind.
• Inflation is the main issue for the economic calendar.

By the end of the week, sterling has recovered some pips to close at around 1.38367, thus avoiding its lowest point of the last seven months. The fear of the Delta variant and expectations about the Fed tapering have served as support for the US dollar during the week. The GBP/USD weekly forecast remains bullish, and focus will remain on fundamental events from the UK economy.

The BoE and the Fed are moving towards a change in their policies to reduce and eliminate the emergency strategies since the beginning of the pandemic. On the UK side, the prime minister’s plan to increase taxes has been paving its way.

Last week was disappointing in terms of the UK’s PBI since its growth in July was only 0.1%, far from the 0.6% expected by most experts, and the lowest level since January. In the US, we can expect an increase in inflation for August since the Producer Price Index increased 8.3% last week.

Upcoming Events

Next week the UK will release data about the employment change on Tuesday, and the inflation and core inflation rate on Wednesday. The forecast for both cases is 2.9%. In the United States, eyes will also be on the inflation rates. Both inflation rates and core inflation rates data will be released on Tuesday, and the forecast is 5.2% for the Inflation rate and 4.3% for the core inflation rate in August.

GBP/USD Weekly Forecast – Daily Chart

GBP/USD Technical Analysis: MACD and RSI Indicate a Bullish Trend

From a technical perspective, the MACD has a bullish trend. The RSI has one as well as it bounces from the 30% level, signaling a possible bullish trend in the next few days.

During the last few days we have seen the pair bounce from the 1,3700 level, so it looks like traders will try to buy near this level and take advantage of the weakness in the US dollar. However, this could lead to the price seeing a bullish trend that could get near to the psychological level of 1.40.

GBP/USD Forecast for Next Week

We expect a modest bullish trend for next week fueled by the USD weakness. The price level should be close to 1.3900, and beyond that, it could challenge the 1.4000 level. In case the price falls, the support level is at 1.3765, which is the seven-month low.