GBP/USD: Weekly Forecast 26th March - 1st April
The GBP/USD had a bumpy week, as trading within the currency pair reflected the anxious behavioral attitude prevailing in the broader market. The GBP/USD reached a high of around 1.23430 on Thursday of last week, as the Bank of England followed the lead of the US Federal Reserve and raised its Official Bank Rate by 0.25% to 4.25%.
While the Bank of England's moves were expected and likely spurred the wave of purchasing for the GBP/USD, things took a turn on Friday as corporate banking anxieties seeped back into the marketplace's mentality.
Suspicions surround central banks as they operate in the shadows. Corporate Finance is on the rise. The very modest highs hit in the GBP/USD last week indicated that financial institutions anticipated the BoE would follow the US Federal Reserve's stance and provide strong language on inflation.
The Bank of England issued a warning to businesses last week to halt boosting prices. Yet, the BoE, like the Fed, has shown its inability to cope with reality. Inflation, which is caused by increased prices charged to customers at the end of the supply chain, is the outcome of rising manufacturing costs.
The point is that neither the Fed nor the BoE appears to have a firm grip on how to control inflation and appear to be waging lost fights.
- And, while inflation continues to be a source of concern, the corporate banking sector is also a source of concern.
- Although technical traders may not want to hear it, concerns over Deutsche Bank this past Friday caused volatility in Forex and a rush to safe havens, implying that the Dollar strengthened as panic grew.
Last week, support levels were durable, but they may be vulnerable if things get dangerous.
While the GBP/USD fell to levels just below 1.21900 early in the day, the currency pair recovered by the end of the day. The impacts of uneasy behavioral sentiment have caused volatility in Forex over the previous two weeks, and this week might be reactive as well.
While support levels have persisted and the lows from last week were seen on Monday as the GBP/USD rose, this is because financial houses believe the US Federal Reserve would be hard-pressed to continue hiking interest rates in the future, corporate banking sector concern remains a serious issue.
GBP/USD Weekly Outlook:
The speculative price range for GBP/USD is 1.20950 to 1.23350
Traders can expect bumpy trading to continue in the coming days since the shadows over the corporate banking sector are unlikely to vanish fast. Speculators may be tempted to assume support levels in the GBP/USD should be durable around the 1.22000 level theoretically, but if fragile sentiment begins to boil, the currency pair may see lows tested again if financial houses seek risk-averse positions, implying support may disintegrate.
If the 1.21900 level is ignored, the next lower challenge for the GBP/USD might be the 1.21700 level. If this ratio falls below 1, it indicates that something has gone wrong in the corporate banking sector, and people are reacting by buying Dollars. It appears as a low of about 1.21000 might hold. Traders are encouraged to exercise caution and actively follow breaking developments in the coming days.
The GBP/ability USD's to surge higher last week came as little surprise, but the reversion lower serves as a warning that broad market conditions remain fragile. If calmer seas can be discovered and the financial sector can reassure investors and speculators, the GBP/USD might resume its upward trend, with 1.23000 ratios as a likely objective.
Traders should, however, not get unduly confident too soon, and should utilize realistic take-profit orders to cash out winning bets. When looking at a three-month chart, the GBP/USD is technically in the midst of its mid-term price range. Speculative traders should exercise caution in the coming days and use risk management.