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GBP/USD: Weekly Forecast 4th June


The GBP/USD jumped upwards in the middle of last week, as the currency pair reacted to comments from two U.S Federal Reserve members.

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The GBP/USD went into this weekend near the 1.24470 ratios; the result higher for the entire week upon inspection is a solid result for the currency pair.  The GBP/USD certainly got a strong dose of impetus in the middle of last week when U.S Federal Reserve members Jefferson and Harker spoke about their viewpoints regarding the Federal Funds Rate. Both FOMC members gave reasons why they believed interest rate hikes should be paused.

The GBP/USD touched a low of nearly 1.23275 on Tuesday, and on Wednesday after briefly moving higher earlier the currency pair was trading around 1.23473 when a positive lightning bolt emerged. The comments from the U.S Fed officials on Wednesday caused speculative buying of the GBP/USD, and by Thursday the Forex pair hit a high of almost 1.25410. And on Friday the GBP/USD briefly touched a value of nearly 1.25450.

Forex trading however is very seldom easy and the U.S jobs numbers on Friday proved the point.  The Non-Farm Employment Change numbers came in with a large increase and this sent the GBP/USD lower immediately. The currency pair was hit by the reality of economic data in the U.S being stronger than expected, which puts the U.S. Federal Reserve in a complex spot. While the two Fed officials made it clear earlier in the week they would like to halt the aggressive interest rate hikes from the U.S. central bank, the better-than-expected employment numbers and the inflation data which continues to remain elevated are problems.

The GBP/USD finished Friday’s trading near its low for the day, yes, the result was well above the lowest values seen last week, but the choppy conditions are a road sign warning about dangers ahead for traders. This week will be rather light on economic data, and market conditions are likely going to be ruled by technical perceptions and debate in the media regarding interest rates as the shadow of the coming U.S Federal Reserve interest rate decision on the 14th of June awaits.

  • After coming off of lows early in the week, the GBP/USD showed an ability to climb higher and confirmed speculative opinion the currency pair had been oversold in the week previously.
  • However, U.S. economic conditions remain troubling, and clarity regarding the Federal Reserve outlook is challenging for all observers.  
  • Choppy trading conditions in the GBP/USD will likely dominate price action all week, but Monday’s results may be an intriguing look into the perception financial institutions hold.

The speculative price range for GBP/USD is 1.23650 to 1.25500

The last two weeks of trading within the GBP/USD have likely not been easy for speculators. Whipsaw price action has certainly caused support and resistance levels to prove vulnerable. Rhetoric this coming week is likely to come from ‘experts’ who are offering their viewpoints about the U.S Federal Reserve decision which will come in ten days.

However, it is clear the GBP/USD and global Forex is nervous regarding a lack of clarity. The ability of the GBP/USD to move above 1.25000 late last week is a sign many financial institutions believe the currency pair is oversold below this ratio, but downward pressure has been reignited because it is difficult to know what the U.S Fed will do regarding interest rates because U.S economic data remains complex.

If the GPB/USD can sustain prices above the 1.24300 level this may be a bullish indication regarding sentiment, but traders looking to take advantage of short-term technical movements in the coming days may find trends reversing suddenly and with volatility. Behavioral sentiment is nervous and the GBP/USD is likely to reflect this in the coming days.

GBP/USD

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