GBP/USD: Weekly Forecast 12th March – 18th March – 12 March 2023
Speculators who crave volatility had some delivered last week via the GBP/USD, and the coming days will provide an additional wild streak of results.
The GBP/USD went into the weekend around the 1.20300 level. Essentially the GBP/USD finished the week where it started and if that was the only story to be told, readers could stop looking at this article now. However, the past four trading sessions in the GBP/USD and the broad financial markets started to feel the effects of a volatile storm which likely caused massive bedlam for speculators.
The GBP/USD traded towards a low of nearly 1.18000 on Wednesday of last week. On Friday the currency pair touched the 1.21175 mark briefly. Risk events via U.S. Federal Reserve Chairman’s testimony in Washington, D.C poured fuel on the Forex fire on Tuesday and Wednesday.
However, Friday provided speculators in the broad markets another day of extremes if they were caught on the wrong side of trading chaos. U.S. jobs numbers came in slightly stronger than expected, but the previous month’s totals were revised downwards. In addition to this, the Average Hourly Earnings came in slightly below expectations. This should have caused the USD to trade slightly weaker based on the Federal Reserve’s mantra that economic data will drive the U.S. Federal Funds Rate in the coming months.
However, this was not the end of the day’s events. Silicon Valley Bank located in California exploded into the news, with the admission that it had suffered a ‘bank run’ and didn’t have enough cash on hand to pay out nervous depositors. The implications from the Silicon Valley Bank rupture will have to still be dealt with in the coming days and could involve the U.S. government and Treasury, and also involve the U.K. government in an effort to protect depositors. At stake is a ‘billions of USD’ sinkhole with economic knock-on effects on V.C. funds, fintech, and other software companies including employee payrolls. Start-ups and well-established tech companies around the world, including in the U.K. may take big hits in the coming days because of exposure.
The potential of intervention regarding the Silicon Valley Bank’s crisis will keep financial institutions nervous this week. The GBP/USD will be hit by the fragile behavioral sentiment.Vital inflation data will come from the U.S. this Wednesday from the CPI statistics.The Federal Reserve is scheduled to pronounce its interest rate decision in the following week on the 22nd of March.
GBP/USD Technical Traders Should also Monitor Developing News this Week
Technical traders may not want to monitor the daily news which is being broadcast by the media as a general rule, but they should make an exception this week. The GBP/USD went from the 1.18000 realms to the 1.21000 level in two days last week. These results underscore the volatility that ripped through Forex. Traders should expect price velocity to remain ramped up when the GBP/USD opens early on Monday and be prepared for fast conditions to remain.
The speculative price range for GBP/USD is 1.17910 to 1.21680
The GBP/USD went into the weekend with some selling developing towards the end of the day. The results demonstrated in the currency pair from Tuesday until going into the weekend should serve as a warning for the potential of additional wild results. Traders need to use the risk management and if they insist on pursuing the GBP/USD, they might want to consider narrow targets that try to take advantage of volatility while placing stop losses slightly further away from market conditions. In order to do this and limit risks, a speculator also will need to use a conservative amount of leverage.
There are large clouds hanging over the financial markets and traders need to be prepared for surprises. Speculators participating in the coming days who are betting on direction need to understand they will need a bit of luck on their side with the GBP/USD. Day traders who believe they know what the U.S. and U.K government reactions will be over the next few days are advised to be cautious with their predictions.
If the 1.20000 mark is broken lower in the GBP/USD it could signal additional weakness may develop. Another jolt of spending to protect at-risk banks and financial exposures is not what the U.S. government wants to be doing right now, and the way they handle the Silicon Valley Bank mess will affect behavioral sentiment this week.