GBP/USD Weekly Forecast: Mixed Data And A Wickedly Fast, Dangerous Range

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Those who traded the GBP/USD currency pair over the past week likely had their emotional fortitude tested, as dynamic price velocity created havoc with swift, choppy reversals.

  • The GBP/USD pair was seen trading near the 1.26840 price level on Tuesday, when the publication of US Consumer Price Index data hit.
  • Before the US numbers were released, it should be noted that the GBP/USD pair was trading at a high not seen since Feb. 2.
  • However, upon the higher US inflation numbers via the CPI, the GBP/USD duo abruptly moved lower.

GBP/USD Weekly Forecast - 18/02: Data-Driven Volatility

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A mark of nearly 1.25900 was being tested within the blink of an eye for day traders. Such traders may have been rewarded handsomely if they had selling positions working before the US report, or perhaps they may have been punched in the gut if they held long positions during the rapid-fire move lower.

The UK also released rather intriguing data last week, which caused further problems regarding the outlook for the GBP/USD pair. While the GBP/USD currency pair went into the weekend near the 1.25990 ratio (which might be seen as an accomplishment given the recent economic data), traders looking forward to this next week of price action need to consider the dangerous landscape ahead. Inflation remains stubborn in the UK, and the Gross Domestic Product statistics from Britain continue to demonstrate recessionary tendencies.


The 1.26000 Ratio and the GBP/USD

The 1.26000 ratio for the GBP/USD currency pair has remained a dynamic magnate for financial institutions. Amidst the whipsaw trading displayed last week, somehow the currency pair was able to climb from a low which went below the 1.25400 level on Wednesday, and it tested this vicinity again on Thursday. The GBP/USD duo also managed to climb back after surprising inflation gains in the US PPI report on Friday.

The US will be on holiday tomorrow, which means that Forex, including the GBP/USD pair, will see rather light trading volume. However, it may be a good time for the GBP/USD pair to take a deep breath and consider the past month and a half of trading.

The GBP/USD duo was trading near a high at around the 1.28275 level on Dec. 28, and it encountered choppy conditions in January and rather durable resistance near the 1.27000 ratio until early February.


Downward Slope and Thoughts about GBP/USD Support

There are likely a number of traders and financial institutions which have rather interesting bullish perspectives on the GBP/USD currency pair for a variety of reasons. First and foremost, they may simply believe the pound has been oversold. And then there are the considerations that the central banks are in a difficult spot and all battling the same problems of mixed economic data. But the next couple of months may remain choppy in the broad Forex markets.

  • The short-term has proven extremely difficult to wager on economic data reports. Trading the ‘numbers’ before the release of US and UK data reports has proven to be dangerous.
  • Support has proven durable since mid-December near the 1.25400 mark. It has been challenged a handful of times by rapid moves lower when bullish traders have run out of power.
  • Traders who have been selling the GBP/USD pair via technical resistance now have to decide where the next resistance level may produce another reversal lower.


GBP/USD Weekly Outlook: Speculative Price Range for GBP/USD is 1.25395 to 1.26560

Choppy conditions have been dominant in Forex, including in the GBP/USD currency pair, and this trend may continue this week. There is relatively light economic data on the schedule this coming week, except for Purchasing Managers Index readings.

Behavioral sentiment will rule the GBP/USD pair in the coming days, as financial institutions try to decide where equilibrium should be as they consider the hurdles the Bank of England and Federal Reserve will have to jump in the months ahead.

Murky outlooks among the big traders may cause additional volatility this week in the GBP/USD pair. The 1.26000 level could serve as a rather intriguing vantage point in the days ahead. Moves above it can be understood while looking at technical charts, but moves below also carry credible perspectives. Risk management will be essential this week in the GBP/USD currency pair.


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