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GBP/USD: Weekly Forecast 18th June


Bullish speculators of the GBP/USD may have been taken by surprise regarding the price velocity the currency pair was able to attain last week.


The GBP/USD will start this week trading near values it has not traded since April of last year.  Last week the GBP/USD hit a low on Monday afternoon near the 1.24860 mark, and from that moment on the Forex pair began to climb steadily higher with momentary reversals lower also factoring into trading.

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On the 25th of May, the GBP/USD was trading near a low of around 1.23025, and after a challenge to the 1.25400 level in early June the currency pair was near the 1.23725 ratio on the 5th of June. These values are meant to show the volatility the GBP/USD has produced in the past month. The move higher to Friday’s close around the 1.28175 mark has not come without choppy results for many speculators.

Friday’s close within sight of highs achieved near 1.28500 is significant.  The U.S. Federal Reserve on Wednesday of last week ‘paused’ their interest rate hikes as expected. This coming Thursday the Bank of England will announce their Official Bank Rate and an increase of 0.25% will be anticipated by almost all financial institutions.

Traders who have remained bullish with the GBP/USD have likely been rewarded the past two weeks of trading and they may be looking for additional upside momentum.  Technical traders will have to pull out long-term charts to gain a perspective on the opportunities for the GBP/USD ahead. On the 18th of April last year, the GBP/USD was trading above the 1.30000 ratio.

However, before traders jump blindly into buying positions without any risk management, the rules of GBP/USD trading have not changed. Reversals lower still occur and plenty of questions regarding data and policy are coming for the Forex market which will affect day-to-day speculation. Having achieved the 1.28000 ratios and sustaining this mark before going into the weekend was a solid result. But risk events are ahead in the coming days via a U.K inflation report and its effect on the rhetoric from the Bank of England.

  • The U.S. has a banking holiday this Monday and the lack of American participation in Forex will cause volumes for the GBP/USD to be lower than normal.
  • Consumer Price Index numbers will come from the U.K this Wednesday and if inflation numbers remain strong this will cause an effect on GBP/USD trading.
  • Thursday’s Bank of England Monetary Policy Summary will be watched for hawkishness in the face of recessionary data and stubborn inflation from Britain.

The speculative price range for GBP/USD is 1.27400 to 1.29500

Last week’s rather fast and surprisingly strong upwards momentum from the GBP/USD was solid for speculators who have maintained bullish perspectives. The U.S Federal Reserve could still cause fireworks in Forex with rhetoric this week based on FOMC member John Williams speaking this Tuesday, and Fed Chairman Powell being in Washington before House and Senate committees the middle of this week. However, support levels for the GBP/USD may prove to be durable and traders may perceive values below the 1.28000 ratios as buying opportunities if they occur on stronger declines.

Inflation results from the U.K. this week via the CPI figures should be watched. If the inflation numbers are stronger than expected this could spur on more buying of the GBP/USD because it will be seen as further ammunition for the Bank of England to stay hawkish.  Any surprises from the inflation data will certainly cause price action in the GBP/USD.

The BoE is certainly going to raise interest rates this week, but this has been traded into the value of the GBP/USD already. Speculators and financial institutions want to see the results of the CPI inflation data this Wednesday for fundamental GBP/USD confirmations regarding their outlook.  If the Consumer Price Index results are above the anticipated number, this could cause buying to start challenging higher realms in the GBP/USD that have not been seen in over a year. The 1.29000 level could be a target, but day traders need to remain realistic regarding their targets and use conservative risk management.



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