Fundamental view:

Pound showed a stronger trend against greenback in the previous week. The BOE has come out of the shadows and supported the pound by all but shelving the option to set sub-zero borrowing costs. The specter of negative rates had been weighing on sterling since the summer but not anymore now.  Another positive factor for sterling was a drop in UK coronavirus cases. The harsh lockdown effect to fight the new, highly transmissible variant is showing some results. Unfortunately, deaths remain high on both sides.

US CB Employment Trends Index on 11^th January  and US CPI yearly report favored bearish trend whereas Britain RICS House Price Balance on 14^th January and US NFIB Small Business Optimism on 12^th January favored bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are US TIC Net Long-Term Transactions at Jan 19, BoE Governor Bailey Speech at Jan 20, US Building Permits, Philadelphia Fed Manufacturing Index, US Initial Jobless Claims at Jan 21,UK Retail Sales monthly report and US Markit Manufacturing PMI at Jan 22.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.05% higher than the previous week. Maintaining high at 1.3711 and low at 1.3451 showed a movement of 260 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 downside. A solid breakout above 1.3710 may open a clean path towards 1.3840 and may take a way up to 1.3970. Should 1.3450 prove to be unreliable support, the GBPUSD may sink downwards 1.3320 and 1.3190 respectively. Chart formation of bullish bat pattern in H4 chart favors prospects of a bullish trend. Three outside down pattern along with spinning top formation escalates the expectation for a bullish trend.