- Investors expect a rate hike next week from the Bank of England.
- US consumer prices experienced limited growth in May.
- Investors expect a slightly lower inflation reading next week.
The GBP/USD weekly forecast is bullish as investors expect a rate hike at next week’s BOE meeting. The pair is expected to continue with its previous week’s uptrend.
Ups and downs of GBP/USD
GBP/USD had a very bullish week as the dollar weakened and the pound strengthened. Investors expect a rate hike next week from the Bank of England and more to come as inflation remains stubbornly high.
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Elsewhere, US consumer prices experienced limited growth in May. Nonetheless, the underlying price pressures remained strong.
Additionally, the Fed meeting took place, marking the first pause by the Fed after ten consecutive rate hikes. However, the dollar rose slightly as the Fed signalled an anticipated 50bps rise in borrowing costs before the year concludes.
Next week’s key events for GBP/USD
There will be a lot of important data coming from the UK next week that will likely cause a lot of volatility for the pound. The UK will start by releasing inflation data, then the BOE policy meeting will follow, and finally, retail and manufacturing data.
However, the focus will be on inflation and the BOE meeting. Investors expect a lower inflation reading which could influence the tone at the policy meeting. Furthermore, the Bank of England appears ready to increase interest rates by a quarter point, reaching a 15-year peak of 4.75% on June 22.
GBP/USD weekly technical forecast: Break above 1.2600 confirms uptrend continuation
The bias for GBP/USD on the daily chart is bullish because the price sits far above the 22-SMA, and the RSI is entering the overbought region. This bullish move is a continuation of the previous bullish move that paused at the 1.2600 key resistance level.
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Notably, bears attempted to reverse the trend at the 1.2600 resistance by breaking below the 22-SMA. However, they could not go below the 1.2303 support level. Consequently, bulls returned with more strength and broke above the 22-SMA and the 1.2600 resistance.
The price is on its way to making a new high and retesting the 1.2900 key psychological level. With the RSI getting overbought, we could see a pause or pullback at 1.2900.
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