GBPUSD Forecast for the Week of January 30, 2017
The major currency pair that was the star of last week has to be the pound though the bigger news was the return of the dollar strength towards the end of the week. It was just a couple of weeks back that we saw the GBPUSD pair make a brief trip below 1.2000 as news and uncertainty around the Brexit process weighed on the pound. But it is to the credit of the pound that it managed to stage a remarkable recovery and rose by almost 700 pips during the last 2 weeks. It has also to be noted that a large part of this rise was based on the underlying strength in the pound rather than any major weakness in the dollar and this should encourage the bulls greatly. We did see the pair make a small correction towards the end of the week as the dollar strength returned and it trades just below 1.2550 to close the week with 1.2500 looming as a strong support.
The biggest news over last week for the pound was that the UK Supreme Court ruled that the UK government has to seek Parliament approval for the invocation of Article 50, which will begin the Brexit process. This was viewed as generally pound positive as it would mean more debate and control over the process. Though the GBPUSD pair dropped immediately after the ruling, the pair recovered as the market digested the ruling and concluded that it was indeed good for the pair. The pound was also supported through the week by some good economic data which continues to show that the UK economy is as strong as ever and has not yet been affected in any way by the Brexit process.
Looking ahead to the coming week, we have a range of news from the UK and the US as the week is the first week of a new month. We have the manufacturing and services PMI and we also have the rate announcement and statement and speech by Carney as well from the UK. Then we have the FOMC rate and statement and the NFP report as well, all of which have the capability to bring in a large amount of volatility in the markets and so the traders are advised to trade very carefully with strict stop losses.
GBPUSD Technical Overview
Previous week close: 1.2548
Current Week Open: 1.2599
Today’s Market Range: 1.2518 – 1.2673
52 wk Range: 1.1450 – 1.5020
1-Year Return – 11.93%
GBPUSD Support and Resistance Forecast
S 1: 1.2090
S 2: 1.1987
S 3: 1.1820
R 1: 1.2424
R 2: 1.2527
R 3: 1.2694