Fundamental view:

The British pound showed an uptrend against the greenback in this week, the catalyst behind this move is the US inflation. The greenback fell after inflation came at 7% YoY – the highest since 1982, while prospects of higher interest rates favor the underlying currency, the dollar reacted differently. The main reason is the undoing of bets on Fed hikes, which are already priced in. On the other hand, Uncertainty about the future of the PM and his successor has had limited influence on the pound so far. The entire UK is now showing a downtrend in infections, this update favored the sterling.

In this week, Fed Chair Powell Testimony on 11^th January and UK Labour Productivity quarterly report on 12th January favored bearish trend whereas US CPI monthly report on 12th January and UK Manufacturing Production monthly report on 14th January favored bullish trend.

The major economic events deciding the movement of the pair in the next week are UK Claimant Count Change, US TIC Net Long-Term Transactions at Jan 18, US Building Permits at Jan 19, Initial Jobless Claims, EIA Crude Oil Stocks Change at Jan 20, UK Retail Sales monthly report and Baker Hughes US Oil Rig Count at Jan 21.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 1.11% higher than the previous week. Maintaining high at 1.3748 and low at 1.3531 showed a movement of 217 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 1.3772 may open a clean path towards 1.3869 and may take a way up to 1.3989. Should 1.3555 prove to be unreliable support, the GBPUSD may sink downwards 1.3435 and 1.3338 respectively. Chart formation of ascending triangle pattern breakout in H4 chart favors prospects of bullish trend. Bullish harami pattern formation escalates the expectation for a bullish trend.