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The GBP/USD currency pair finished the trading week near the 1.29150 mark, which was above the lows seen on Wednesday. The 1.28350 ratio was challenged as behavioral sentiment was tested in full.

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• Not unexpectedly, volatility took hold of the GBP/USD currency pair last week as the duo reacted to the US election.
• The GBP/USD pair climbed to a high of nearly 1.30450 on late Tuesday. However, within half a day’s time, the 1.28350 vicinity produced a low on Wednesday.
• Day traders that tried to participate in last week’s drama were hopefully using solid risk management.

After Donald Trump won the presidential election, the US Federal Reserve on Thursday (along with the Bank of England a handful of hours before) cut interest rate costs by 0.25 to the 4.75% level. The cuts from the US and UK central banks were expected in both cases. The GBP/USD currency pair sank to around the 1.28950 level on Thursday, before it started to climb. The currency pair went into the weekend at around the 1.29150 level.

GBP/USD: Lows Tested and a Return to Normal Trading Conditions

While the trading in the GBP/USD currency cross was volatile, it was not out of the ordinary. Traders with experience certainly knew how fast conditions would change last week. Now that the US election is done and the Federal Reserve and Bank of England have acted, the coming week of trading will return to mostly normal trading conditions.

Plenty of economic data will factor into trading in the coming days. The US will release CPI on Wednesday and another inflation report on Thursday, while Britain will publish its growth numbers on Friday.

The GBP/USD pair managed to climb above the 1.29000 level and sustain its value going into the weekend. The price of the currency pair has been hovering near price values seen in the middle of August.

Trading in the GBP/USD duo has certainly been bearish since the last week of September, and now it may be time to ask if risk-adverse trading could be overdone. Financial institutions have more clarity regarding the outlook over the mid-term, and much consideration will be given once again to the US Federal Reserve’s rhetoric.

Early Trading and Equilibrium in the GBP/USD Pair

After a handful of rather turbulent weeks in the Forex market, and as financial institutions become cautious, speculators may believe the time is now right to look for upside in the Forex pair. However, before day traders jump blindly into long positions, they should make sure the recent support levels are proving durable early this week.

If the GBP/USD pair can maintain support above the 1.29100 level and begin to test higher prices before the US Consumer Price Index numbers this Wednesday, it may show financial institutions believe there is some upside to achieve. However, for this to prove true and for the GBP/USD pair to climb higher, the US CPI numbers will have to come in weaker than estimated.

GBP/USD Weekly Outlook: Speculative Price Range is 1.28825 to 1.30450

The GBP/USD currency pair now appears to be within an interesting lower price range. The 1.29000 level needs to be monitored in the coming days. If trading falls below this level early this week and is sustained, this could be a bearish signal from financial institutions which may believe the election of Donald Trump will cause a stronger US dollar over the mid-term.

However, if financial institutions feel that US economic policy will now start to be affected by the policy of the US Federal Reserve again, there is a chance the GBP/USD pair could see some bullish momentum develop.

The near-term is likely going to remain choppy as traders try to gauge sentiment. The past handful of nervous weeks should start to subside, but now the 'Trump effect' will have to be studied in the coming days. Risk management will be essential, and perhaps there will be a bit more volatility seen via the results of the economic data starting this Wednesday.

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