Fundamental view:

The British pound has rallied during the course of the trading week. The market is continuing trading depending on the expectations of rising inflationary pressures in the US and how those may affect the Federal Reserve monetary policy while uncertainty about the UK reopening played a role in moving the pound.

The UK has loosened many of the restrictions, but doubts crept in about the final stage due on June 21. The strain found in India consists of only a small part of overall COVID-19 cases but it is spreading rapidly. In the time being, Britain has only attempted to accelerate its vaccination campaign without stopping the reopening. That has supported sterling. 

US NY Fed Empire State Manufacturing Index on 17^th May and US Building Permits on 18^th May favored downtrend whereas US EIA Crude Oil Stocks Change on 19^th May and US Philadelphia Fed Employment on 20^th May favored uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Governor Brainard Speech at May 24, BoE MPC Member Tenreyro Speech, US CB Consumer Confidence Index at May 25, UK Nationwide HPI yearly report, US GDP quarterly report, US Core Durable Goods Orders monthly report at May 27 and US Michigan Consumer Sentiment at May 28.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.47% higher than the previous week. Maintaining high at 1.4234 and low at 1.4090 showed a movement of 144 pips.

In the upcoming week we expect GBP/USD to show a bullish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1.4223 may open a clean path towards 1.4300 and may take a way up to 1.4367. Should 1.4079 prove to be unreliable support, the GBPUSD may sink downwards 1.4012 and 1.3935 respectively. Chart formation of cup and handle pattern in H4 chart favors prospects of a bullish trend. Harami pattern formation escalates the expectation for a bullish trend.