- Although the GBP/USD did go into this weekend near its starting point last Monday, the week’s results in the currency pair were noteworthy. Wednesday established a high for the GBP/USD around the 1.30125 vicinity, coming via a reactive storm as the U.S Federal Reserve delivered its FOMC Statement.
- The GBP/USD did touch a low however on Friday that sank to around 1.28925, before seeing some slight buying as trading for the weekend came to a close.
- While it would be easy to write the GBP/USD is merely trading within a known higher range that financial institutions are comfortable, it should be pointed out that the highs seen on Wednesday occurred most likely when some folks bought the currency pair on the prospects of the U.S Fed mentioning it still wants to cut the Federal Funds Rate twice this year.
- The higher levels seen on Wednesday did traverse values seen in the first week of November.
The Bank of England released their interest rate decision this past Thursday and it met expectations, meaning it delivered little new information. The U.K economy remains lackluster and close to recessionary. The BoE like the Fed is acting in a very conservative manner, preferring a reactive stance compared to proactive central bank policy. Both the BoE and Fed have borrowing rates of 4.50% and they are both under scrutiny from critics.
The ability to trade above 1.29000 in a sustained fashion – not counting the brief dip below seen on Friday – may prove to be a positive signal for the GBP/USD, but shadows remain. Forex continues to see USD centric weakness filter into currency pairs, but financial institutions remain cautious because outlooks remain unclear and this leads to choppiness frequently.
The GBP/USD was trading around the 1.25880 mark on Monday the 3rd of March. The upwards climb in the currency pair has been solid. Values in the GBP/USD above the 1.29000 are likely looked at positively by bullish GBP/USD traders.
- While the 1.30000 resistance level proved rather strong this past week, the flirtation could be a sign of things to come if some more positive impetus seeps into financial institutions who feel more comfortable with the rhetoric from the U.S White House.
- At some point economic data will become a catalyst again in Forex.
- The U.S will release GDP results this coming week, but they will have very little to do with President Trump yet.
- The Fed did make it clear they want to see what happens in the mid-term and financial institutions likely feel the same way.
The GBP/USD had done well in a bullish manner since the start of March. While last week’s trading ended back where it essentially began the ability to test higher values may be looked upon favorably by financial institutions which might be leaning into mid-term bullish perspectives for the currency pair. Trading early this week will of interest and depend on risk appetite likely coming from the broad markets.
Sentiment is a key driver for the moment and the GBP/USD is correlating to the broad Forex market in step. If the 1.29000 level hold as support early this week it may be a sign additional buying momentum is going to develop. Another test of 1.30000 is not out of the question, but if sentiment gets shaken by sudden rhetoric that creates nervous tension a move to the 1.28800 to 1.28700 ratios would not be an utter surprise either.
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