Last week break of 1.2200 support level has put the focus back on the bears and now the more likely scenario is for more downside. Naturally the big psychological number 1.2000 will be a major hurdle for the GBPUSD and we can expect some bounce before the real sellers will show up. The stochastic indicator has also more room to fall before it reaches oversold conditions which is another positive sign for the bears.
To the upside, we have the old support 1.2200 level turning now into resistance followed by the 1.2300 round number. Only a break and a close above 1.2200 will expose 1.2300, while a break of the 1.2432 will signal a much greater shift in sentiment and consequently a much bigger rally.
The UK economic calendar can offer us some catalysts that can drive the GBPUSD volatility higher. We start the week earlier on Monday when the BOE Governor Mark Carney is due to deliver a speech titled “Policy Issues Affecting the Bank of England” at the London School of Economics. Tuesday the CPI inflation figures, based on the market consensus should pick up from 0.2% to 0.3% while the annualized CPI figures are expected to inch higher to 1.4%. The UK retail sale scheduled on Friday is another piece of news event that you should keep an eye on.
Last but not least, the UK Prime Minister May is due to speak on Tuesday about triggering the Article 50 which will be a major catalyst for a sudden spike in volatility.
Previous GBPUSD Weekly Forex Forecast
GBPUSD Weekly Forex Forecast – 16th to 20th Jan 2017 – Bearish
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