The GBP/USD struck a high around the 1.27960 mark last Thursday and came within sight of the value again on Friday, this before a reversal lower took place as the weekend approached. The GBP/USD will begin tomorrow’s trading around the 1.26793 ratio. Traders who were fortunate enough to be wagering on upside momentum last week in the GBP/USD as the currency pair languished near lows of 1.25000 may have achieved solid results.

However if a trader was holding onto the GBP/USD stubbornly as Friday closed with a long position, perhaps they lost money or are hoping for a turnaround upwards to come early this week. Trading tomorrow and Tuesday will reflect sentiment in an important manner in the GBP/USD near-term, speculators may believe optimism will continue to be demonstrated and remain bullish.

While the GBP/USD turned in a solid streak upwards on Wednesday and Thursday of last week, the pair actually closed near values it was traversing in late November and early December. The current value of the GBP/USD is certainly within the higher elements of its mid-term range. Traders, who bet on a one way direction upwards to be accomplished however, were once again reminded that reversals are a daily component of Forex.

Day traders may rightfully believe that behavioral sentiment will continue to flirt with higher values in the GBP/USD, but they should also be aware that choosing their entry points remains very important. The GBP/USD will open this coming week’s trading near interesting support levels and the 1.27000 ratio will certainly be a factor psychologically in the currency pair and perhaps a target for some traders.

However, short-term speculators must remain conservative regarding their use of leverage if they want to be able to stay within a GBP/USD trade which may demonstrate volatility. Cashing out winning positions before they vanish into thin air is important for day traders.

Yes, the Federal Reserve and the Bank of England both took on more neutral outlooks via their monetary policy statements last week and interest rates may become more dovish. However, the short-term outlook will still be affected by the daily gyrations of the broad markets. Traders also need to acknowledge that volumes in Forex, including the GBP/USD will start to diminish as the week grows because of the holiday season approaching.

• Upwards momentum in the GBP/USD may be the overwhelming sentiment in the GBP/USD, but the currency pair will still experience moments where reversals lower will be seen.
• This Wednesday the UK will release its Consumer Price Index readings, and the inflation report is expected to show slight decreases.
• U.S. GDP numbers will be published this Thursday; the GBP/USD may be affected by this report momentarily.

Speculative price range for GBP/USD is 1.25970 to 1.28480

Behavioral sentiment is likely going to be a major factor in the GBP/USD this coming week. Having been able to move higher and touch values last seen in August of this year was certainly positive for the British Pound. However, resistance did push the currency pair lower as the weekend came into sight, and financial institutions may prove to be active early this week as they position for their absence during the upcoming holiday season. Day traders who insist on participating in trading early this week should prepare for the potential of volatility. Support near the 1.26600 to 1.26500 may prove durable, but traders should use solid stop losses if they remain bullish and are looking for upwards momentum to grow.

If the GBP/USD can climb above the 1.27000 level early this week and show an ability to sustain its ground, this might signal buying sentiment remains strong. The question is if positive GBP/USD momentum can continue to build as the Christmas and New Year holidays affect trading volumes. Financial institutions are likely situating themselves for a stronger GBP/USD outlook mid-term, but this coming week still needs to prove the currency pair can maintain the gains the Forex pair has made and not lurch back to lower depths near the 1.26100 to 1.25900 ratios. If the GBP/USD climbs above 1.27000 and begins to challenge resistance levels traversed late last week, this may open the doors for further gains.

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