Forex traders who participated in GBP/USD last week may have had their mental fortitude tested as dynamic price movements wreaked havoc with rapid choppy reversals.
- On Tuesday, following the release of the US Consumer Price Index, GBP/USD was trading around the 1.26840 price level.
- It should be noted that before the US statistics were released, GBP/USD was trading at its highest since February.n.d. February’s.
- However, GBP/USD suddenly fell due to the increase in US inflation rate due to CPI.
For day traders who could have been handsomely rewarded for a short position before the US report, the mark near 1.25900 was quickly tested, or long in a rapid move. Lower than I might have hurt my stomach if I had held my position.
The UK also released some pretty interesting data last week, which raises further questions about the outlook for GBP/USD. GBP/USD hovered around the 1.25990 ratio this weekend (which may be seen as a positive outcome given the economic reports of the past few days), but traders looking forward to this week’s price action need to be considered. A dangerous landscape unfolds before your eyes. Inflation remains stubborn in the UK, and UK gross domestic product statistics continue to show a recessionary trend.
The GBP/USD 1.26000 ratio remains very influential for financial institutions. Amid the heavy trading exhibited last week, the currency pair somehow managed to rally from its lows below the 1.25400 level on Wednesday, and tested this area again on Thursday. GBP/USD also managed to gain after Friday’s US PPI report showed another surprising rise in inflation.
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Tomorrow is a holiday in the US, so foreign exchange trading volumes including GBP/USD will be quite low. However, it might be a good time for GBP/USD to take a deep breath and consider what it has seen over the past month and a half of trading. GBP/USD was trading near highs on the 28th, around the 1.28275 level.th January saw some instability, and until early February we saw fairly durable resistance around the 1.27000 ratio.
There are probably a number of traders and institutions that have a pretty interesting bullish view on GBP/USD for a variety of reasons. First and foremost, they may simply believe that the pound is oversold. There is also the idea that central banks are in a difficult situation and that all central banks are grappling with the same problem of mixed economic indicators. However, the overall foreign exchange market is likely to remain volatile in the coming months.
- Making short-term bets on coverage of economic indicators has proven extremely difficult. Trading ‘numbers’ before the US and UK data reports were released proved dangerous.
- Support has proven persistent around the 1.25400 mark since mid-December, but has been challenged several times by rapid declines when bullish traders ran out of steam.
- Traders who have been selling GBP/USD through technical resistance need to determine where the next resistance will be for further declines.
Volatility prevails in the foreign exchange market, including GBP/USD, and this is likely to continue this week. With the exception of the Purchasing Managers Index, relatively light economic indicators are scheduled for this week. Behavioral sentiment remains weak on GBP/USD in the coming days as financial institutions try to decide where to place the balance given the hurdles the Bank of England and Federal Reserve will have to jump over the coming months. will be in control.
GBP/USD volatility is likely to rise further this week as the outlook remains uncertain among major traders. 1.26000 could act as a pretty interesting favorable point in the coming days. The movement above it can be understood by looking at the technical chart, but the movement below it also contains a reliable outlook. Risk management will be important in GBP/USD this week.
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