The GBPUSD is in the process of bouncing from extreme oversold conditions. The Stochastic indicator is showing bullish divergence as the price is making lower lows while the stochastic is making higher lows. We also have a buildup in bullish momentum which is typical for the range zones. The first level of support comes at 1.2100 and only a break below invalidates the bullish view and the threat of breaking the 1.2000 big psychological number increases. On the upside, we have the intraday pivot point at 1.2230 while the first level of resistance only comes at 1.2420. The first major risk event comes in the form of the CPI inflation figures. According to the latest figures, the UK CPI inflation stands at 0.6% below the BOE’s 2% inflation target. The market consensus is for the inflation to tick higher due to the recent weakens in the British Pound and we should expect the CPI to inch to 0.8%. Recent comments from the BOE Governor Mark Carney also suggest the potential for the 2% inflation target to be reached faster than anticipated due to the Brexit effect.

GBPUSD Weekly Forex Forecast - 17th to 21st Oct 2016 - BULLISH