GBP/USD Weekly Forecast – 09/03: Gains Accomplished (Chart)

  • The bullish trend accomplished in the GBP/USD this past week will be given a myriad of reasons by onlookers and traders, but at the end of the day it will be hard to debate the notion that behavioral sentiment was the greatest influence.
  • The U.K did not turn in magnificent economic data, nor was there a change to the Bank of England’s monetary policy.
  • The GBP/USD reacted to financial institutions beginning to buy the currency pair based on changing outlooks.
  • On the 3rd of February the GBP/USD fell to a value of nearly 1.22500, this after having been able to topple the 1.24000 level in the days before.

GBP/USD Weekly Forecast - 09/03: Gains Accomplished (Chart)

The GBP/USD has seen volatile trading the past few months, but its ability to consistently create upwards momentum (within the scope of volatile reversals) got another dose of stronger momentum this past week. Some analysts will question why the GBP/USD and EUR/USD are gaining as the BoE and ECB are lowering interest rates and the Fed appears cautious. It is a good question.

Financial markets have seen volatile trading the past two weeks globally as investors react to the noise coming from the U.S White House and try to contemplate what will actually happen compared to what is being said. Tariffs, politics mixed with economics, and interest rate talk have all gotten attention. Yet, the GBP/USD and most other major Forex pairs have started to see the USD get weaker. The consideration that fears which had been priced into Forex in the few months is now being discounted is genuine.

Plenty of questions remain regarding what results will be seen in the coming months because of changes to U.S policy, but financial institutions may be beginning to get used to the noise and simply reacting to the notion the USD had been overbought. The ability to recapture the 1.26000 terrain and sustain it early last week was important for the GBP/USD. The influence of the Germany fiscal and economic announcement early last week regarding increased spending and debt creation via bonds also sparked financial institutions sentiment in Forex. The EUR/USD exploding higher certainly helped the GBP/USD move higher. Again plenty of rhetoric is being heard and financial institutions lack real results, but they are clearly trading based on outlooks.

GBP/USD traders who are bullish should not rest to comfortably quite yet. The currency pair is traversing values last seen in the first week of November. And traders should acknowledge the first week of November in 2024 was when financial institutions began reacting to the Trump victory.

  • It is possible to consider the notion that financial institutions have only returned to a sphere in which they have recreated price equilibrium in the broad markets, including the GBP/USD and Indices, and now are waiting for more impetus.
  • Financial institutions now appear to be asking what the actual results of the Trump rhetoric will be to the global economy.
  • In the meantime, they have returned the GBP/USD to a known price range.
  • When will resistance start to become a factor in trading the GBP/USD?

The climb higher in the GBP/USD contained price velocity which reacted to the move higher being generated in the EUR/USD, which the currency pair is closely associated. The U.S will release important CPI and PPI inflation reports this coming Wednesday and Thursday. But like the U.S jobs numbers seen this past Friday, data may not factor much into behavioral sentiment quite yet. In October of 2023 the GBP/USD did see trading above the 1.30000 mark, but this was attained on a bearish run lower after the currency pair had seen highs in September above the 1.34000 ratio momentarily as financial institutions bet on a more dovish Federal Reserve.

However, the Fed isn’t going to become dovish near-term, many questions need to be answered regarding U.S policy and the results remain difficult to guess. The highs achieved by the GBP/USD were significant this past week, but resistance is likely going to start factoring into perspectives. Trading above the 1.30500 level in the GBP/USD may prove to be overbought territory if it is challenged. Choppy results are likely in the coming days.

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