The GBP/USD went into this weekend near the 1.35177 mark, essentially near a ratio the currency pair was traversing just before the start of the Iranian war. The GBP/USD did touch a high of nearly 1.36000 earlier on Friday before stumbling back to marks it had traded on Thursday. The finish to the week in the GBP/USD did correlate with the broad Forex market.
Technical charts for day traders will certainly show what the results have been regarding price swings in the GBP/USD, and it can be argued they show the reactions of financial institutions. However, what they also show is the speed of the velocity still being seen in Forex and reactionary behavioral sentiment that remains anxious.
The ability to test highs last week didn’t achieve some type of record valuations for the British Pound, they merely touched values seen in late February and remain below prices demonstrated in the middle of February and certainly those seen in January.
Some analysts may be extolling the virtues of their mid-term viewpoints, but day traders and even financial institutions having to pick a direction in the GBP/USD in the short and near-term remain perplexed by the sudden shifts of outlook which continue to be highlighted. The price of WTI Crude Oil remains an important fixture for global assets as traders judge their risk appetite according to developing news from the Middle East saga.
Noise from the U.S While House and from Iran continue at a rapid pace. The lack of any real knowledge about what is going on in the Strait of Hormuz as of this writing is rather important. While the White House claims one story regarding the navigation capabilities of the waterway, the Iranians are claiming another. The lack of information going into early trading on Monday may cause knock-on effects not only in Crude Oil, but Forex as well. Meaning trading in the GBP/USD will remain under the threat of volatile possibilities as the week opens.
The ability to reach a high of 1.36000 this past Friday was important as a sign of optimism. If the situation in Iran can reach the prospect for a more positive conclusion it will certainly ignite more risk taking as investors dive into the prospect of better results ahead in equity markets via the idea that energy costs will be lower.
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However, if the Iranian situation starts to escalate once again, then the GBP/USD like all other currency pairs will start to show the likelihood of USD centric strength once again.
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The highs reached in the GBP/USD could be challenged again, but the ability to traverse with speed as the weekend approached showed that financial institutions remain cautious about what could transpire when they are away from the office.
Speculative price range for GBP/USD is 1.33800 to 1.36250
The GBP/USD like all of Forex is moving on a risk on / risk off venue that is being determined with lightning speed due to the developments from the Middle East. The GBP/USD certainly showed the capability of building buying momentum towards the end of last week as optimistic banter was heard about the capability of WTI Crude Oil trading at lower values.
Tomorrow’s opening in the GBP/USD will be volatile like the past handful of weeks, this as large traders return to the markets after a weekend of digesting the news. The question is if they will be suffering from indigestion or will they be feeling calm. The next 24 hours via the news cycle will determine the volatility that will be the result of noise coming from the U.S White House and Iran. Day traders need to remain careful under the current circumstances.
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