GBP/USD: Weekly Forecast 5th March - 11th March
The week ahead for the GBP/USD will need careful assessment of possible 'traps' in economic data and rhetoric. The GBP/USD pair ended the week around 1.20430 following a bumpy and tense trading session.
A low around the 1.19220 ratios was touched early on Monday and again on Thursday. Nonetheless, a high of around 1.21445 was briefly shown on Tuesday. After finishing the week amid its five-day range, the GBP/USD will undoubtedly cause further anxiety, and it has the potential to undergo a flurry of volatility in the coming days.
Rhetoric from the US Federal Reserve and employment figures are on the way
Speculators should buckle their seatbelts and prepare themselves for whipsaw outcomes in the GBP/USD this week. The GBP/USD range was apprehensive last week, but it maintained its recognized values, and financial houses were likely focused on the risk events that are scheduled for the currency pair in the coming days.
On Tuesday, Federal Reserve Chairman Jerome Powell will speak before the United States Senate about monetary policy. His remarks will undoubtedly be scrutinized, and experts will try to gain a better understanding of the Fed's view of the US economy, including inflation, growth, and interest rate policy.
The Fed will almost definitely boost its benchmark lending rate by another 0.25% on March 22nd, but what financial markets are interested in is what will happen following this hike. More rises are expected, although some financial institutions believe the US Fed will turn more dovish in the medium term.
The employment figures for the United States will be released on Friday. The United Kingdom will release Gross Domestic Product figures on the same day, a few hours ahead of the United States Non-Farm Employment Change data.
The combination of US Fed rhetoric and economic data due later this week is certain to generate a whirlwind of volatility in the GBP/USD, and traders must be prepared.
The ability of the GBP/USD to rise over the 1.21400 ratios early last week is intriguing
Undoubtedly, the GBP/USD hit its weekly bottom twice, but it also managed to deliver some significant upward price momentum on Tuesday. The upward movement suggests that certain positive viewpoints persist among financial organizations that are looking long-term. Day traders do not have this advantage when making quick bets, but the idea that sentiment can still cause upward momentum is intriguing.
However, for the GBP/USD to produce a solid upward trajectory that can be sustained, Fed Chairman Jerome Powell's dovish comments this week and weaker US job numbers are required. This may not be the case, and traders should be prepared to see support levels challenged again in turbulent conditions. Powell is likely to voice concern about inflation. Also, traders should keep in mind that the US Non-Farm Employment Change data was stronger than projected last month.
GBP/USD Weekly Outlook:
The GBP/USD speculative price range is 1.18775 to 1.21805. Traders should exercise caution this week and ensure that their risk management mechanisms are fully operational. Bullish traders may regard last week's low tests and reversals upward as encouraging, but it might also be a hint that if lows are tested again, they may be pierced this time.
If the GBP/USD goes below 1.20000 early this week and holds at this level heading into Jerome Powell's speech on Tuesday, volatility will be a definite result of the Fed Chairman's words. If the 1.19700 to 1.19500 ratios are challenged, a cascade that targets the 1.19000 ratios may ensue. If this fails, a repeat of the January lows might occur quickly. If US job figures are positive late in the week, the GBP/USD might see wild activity.
To continue positive action in the GBP/USD this week, Fed Chairman Powell will need to sound more dovish. Less forceful remarks from Powell seem improbable, but if he sounds cautious and hints the Fed may reverse its course in the future, the GBP/USD may rise. If US jobless claims fall short of expectations on Friday, the GBP/USD might revisit the 1.21400 level and beyond.