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The GBP/USD currency pair finished the week at the 1.27000 level, and this ‘accomplishment’ highlights the rather dynamic trading the pair has experienced in recent days. On Wednesday of last week, the GBP/USD pair traded near the 1.25970 ratio.

During the recent and rather turbulent sell-off of the GBP/USD pair, many bullish speculators may have lost their nerve and walked away from losing positions - only to then watch their trading screens display a reversal upwards. Last week’s trading in the GBP/USD currency pair was volatile, and the past few weeks have been quite dramatic. This coming week may produce more of the same in the currency pair.

However, the finish of last week showed why trading is nearly always influenced by time frame perspectives. While the GBP/USD duo faced whipsawing results over the past two weeks, its finish near the 1.27000 level going into the weekend put the currency pair within a psychologically important, technical, and perhaps fundamental range.

The GBP/USD pair was seen trading near the values it has traversed since the US Federal Reserve’s change of rhetoric on Dec. 13. Those with a mid-term view of the currency pair will likely continue to pursue an upwards trend.

The Past Month of Trading and the Coming Week for the GBP/USD

Speculators who have been bullish regarding the GBP/USD pair faced headwinds when the currency pair climbed near the 1.27800 mark over the past month. The GBP/USD pair did trade above the 1.28000 ratio briefly on Dec. 28. However, these higher values slipped from the grasp of bullish speculators, and reversals downwards have proven painful.

Yet, experienced speculators likely know that Forex results are frequently problematic during the holiday season. Lighter-than-normal volumes during the Christmas and New Year's season followed by the return of financial institutions in the first week of January often lead to volatility, and that has been demonstrated once again.

The week ahead for the GBP/USD pair may prove to be rather troublesome for short-term speculators as they try to find a durable trend to take advantage of.

Data Problems and Short-Term Volatility in the GBP/USD

The ability of the GBP/USD currency pair to move higher on Friday and touch a key psychological level is an important bit of evidence that bullish perspectives still linger in financial institutions.

Economic data from the UK and US last week proved to be rather troubling. Inflation in the UK has remained stubborn, and Retail Sales figures were quite weak. US Retail Sales figures have been strong and Consumer Sentiment improved, yet Home Sales still fell.

• Purchasing Manager Index readings will come from the UK on Wednesday, and the results are expected to be lackluster.
• If the GBP/USD pair can maintain the 1.27000 level in trading early this week, that could be a sign that the tide is starting to shift regarding steady bullish sentiment. However, traders need to be conservative.
• Important GDP from the US could affect the GBP/USD pair on Thursday, too.
• Next week, both the Federal Reserve and Bank of England will be heard from regarding their monetary policy outlooks.

GBP/USD Weekly Outlook: Speculative Price Range for the GBP/USD is 1.26590 to 1.27670

This may prove to be a rather speculative week for the GBP/USD currency pair in regards to recent price realms. Incoming data will be significant, but it is likely that financial institutions are primarily waiting for Central Bank insights which will only start being delivered about ten days from now.

The 1.27000 level will prove to be a solid gauge regarding risk sentiment this week. Day traders may want to stand on the sidelines early on Monday and watch the movement of the GBP/USD pair, but they should expect to see rather choppy results the entire week.

While global risk appetite continues to show signs of life in major equity indices, Forex remains rather turbulent as a bit more clarity regarding monetary policy is waited upon from the Federal Reserve and Bank of England. Higher-than-anticipated inflation numbers from the UK likely caused some nervousness for financial institutions, particularly when the inflation numbers mixed with the rather poor consumer spending numbers from Britain.

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