GBP/USD: Weekly Forecast 9th July

Many financial institutions have come to accept the notion the U.S. Fed will have to increase its interest rates later this month, but they also suspect the Bank of England will have to be potentially more aggressive.

The GBP/USD jumped solidly upwards as the week finished, suddenly penetrating resistance and coming with sight of the 1.28500 ratio.

The GBP/USD raced towards its monthly highs as Thursday and Friday finished the week of trading with a flourish upwards for the currency pair. Speculators who have been aiming for higher values saw the 1.28000 begin to emerge as a target on Thursday, and then on Friday see the resistance level get brushed to the side. The GBP/USD went into this weekend with a ratio of around 1.28375.

The move higher in the GBP/USD is remarkable and shows how financial institutions look at future prospects. While inflation data from the U.K. remains high and mortgage prices in Britain are problematic, the GBP/USD has marched merrily upwards recently. The high around 1.28500 was challenged in the middle of June also, but the last time the GBP/USD was above this juncture was in early April of 2022. The move higher in the GBP/USD may be surprising to even the most bullish amongst its speculators.

U.S. Average Hourly Earnings on Friday came in higher than anticipated.  This likely gave many financial institutions reasons to suspect the U.S Federal Reserve will have to raise interest rates again in late July. But the upwards momentum of the GBP/USD shows that traders are likely betting the Bank of England may have to remain more aggressive than the U.S Federal Reserve.

Traders cannot count on one-way avenues upwards, and even this past Friday a reversal lower was demonstrated which took the GBP/USD to a mark of nearly 1.27250 before it incrementally started to show a robust surge again. Economic data from the U.K. this week will include Claimant Count Change and wage numbers. BoE Governor Bailey will also be speaking a few times this week.

• Before traders bet blindly on upwards movement from the GBP/USD they should know important inflation data will come from the U.K and U.S this week.
• After making highs in the middle of June similar to the values now being seen, the GBP/USD fell to a low around 1.25900 on the 29^th of June. This should serve as a caution sign for speculators who attempt to wager without enough risk management.

The speculative price range for GBP/USD is 1.27600 to 1.28900

Yes, it is true the GBP/USD has gone up and speculators betting on the momentum higher likely had a rather good week that is if the reversals lower beforehand didn’t knock them out of the game before the GBP/USD recovered. However, one week of solid results does not mean the same expectations can be expected in the days to come. Traders should remain cautious because plenty of economic data this week which could cause volatility. CPI and PPI data from the U.S. will come on Wednesday and Thursday. If the GBP/USD should start to move lower and fall through the 1.28000 mark, support near the 1.27900 to 1.27800 could prove worthwhile to watch. If these levels hold it could signal additional movement upwards could be speculated on.

Many financial institutions have come to accept the notion the U.S. Fed will have to increase its interest rates later this month, but they also suspect the Bank of England will have to be potentially more aggressive. If the GBP/USD rises above the 1.28500 mark and begins to show an ability to keep above this height, speculators may start to believe the 1.29000 realm is a legitimate target. But day traders should stay realistic and not wager on targets that are too far away while using too much leverage. The market forecast could prove right eventually, but if volatility knocks a trader out of the GBP/USD on small reversals lower, any upside movement would then be worthless to a speculator without the funds to bet. Cashing out winners is a solid tactic instead of wishing on castles built in the air which may never be seen.