The GBP/USD went into this weekend near values it opened last Monday’s trading. Cautious financial institutions were given the hope of more clarity last weekend, when it because known the U.S government shutdown would likely end.
- The shutdown concluded early this week, but Forex produced rather stable consolidated returns including the GBP/USD. The correlation to the broad market and the potentially perceived lower realms the currency pair still lingers within may spur on speculative conditions in the coming days.
- Risk appetite may be the ambition of many day traders, but financial institutions still suffer from a lack of insights regarding what the Federal Reserve will do about its interest rate policy on the 10th of December. U.S economic data will start to be released by government offices that had been shuttered for over one month this coming week.
U.S Non-Farm Employment Change numbers will be released this coming Thursday via a delayed report that had been due in the previous month. The U.K will publish important inflation numbers on Wednesday via Consumer Price Index reports.
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Lack of Clarity and Forex Choppiness
A look at a six, three and even a one month technical chart will show the GBP/USD trading within lower realms via its trend. The GBP/USD however was trading comfortably above the 1.34000 vicinity before the U.S government shutdown on the 1st of October. However, before optimistic bulls rush in and try to buy the GBP/USD under the assumption that is where the currency pair should be, they need to acknowledge sentiment regarding the U.S Fed has changed.
Financial institutions going into October were leaning into a belief the Federal Funds Rate would be cut rather aggressively. However the last rate cut the Fed implemented also carried a warning that because of the U.S government shutdown there was a lack of economic data. Meaning a clear outlook for the December FOMC meeting could not be delivered. And now as this week gets ready to open the GBP/USD remains in the lower realms of mid-term price realms, but financial institutions remain nervous. Choppy conditions should be anticipated this week.
Changing Policy and Rhetoric from White House
While technical traders may not want to hear that behavioral sentiment is a large factor in Forex, the GBP/USD is clearly under the duress caused by cautious attitudes.
- While President Trump gave the go ahead to lower tariffs on food prices to combat inflation that consumers face this past week, this may not be enough to propel analysts to believe the Fed will use this as a consideration regarding its interest rate policy.
- Traders were able to sustain what can be considered slightly higher terrain in the GBP/USD late this past week, but resistance around the 1.32000 should be monitored.
- Downside dangers in the GBP/USD are less prevalent it may appear, and this may ignite speculative buying positions in the currency pair too.
GBP/USD Weekly Outlook:
Speculative price range for GBP/USD is 1.31290 to 1.33100
The GBP/USD does look like it has room to logically propel higher, but short-term timeframes should not get over confident about when a sustained charge upwards will ignite. If the GBP/USD can move above the 1.31900 level and show that it is not going to back down wildly from this ratio, this could signal another dose of buying is going to enter the speculative window. However, economic data will start to be a factor this week in Forex and the broad markets.
The Federal Reserve will remain a talking point as analysts try to read the tidbits of hints given by FOMC members and Fed Meeting Minutes which will be published this Wednesday. Having suffered some downward momentum the past couple of months, the GBP/USD may be in store for upwards value, but it will come with a fight and speculators should use targets that cash out profits when they materialize, so they do not suffer from intraday reversals that are a constant danger for smaller accounts.
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