Fundamental view:

The British pound attracted ‘buy the dip’ traders and closed high against the greenback during the trading course of the week.  The improved market mood could be the rationale behind the move. The reports that the Omicron variant might be less severe than feared helped in easing the worries about the continuous surge in new COVID-19 cases in the UK and improved the market mood. Moreover, a UK study indicated that Omicron infections are less likely to lead to hospitalization, which in turn fueled the Pound bulls. Alongside, subdued US dollar demand was also seen as another factor that provided boost to the sterling buyers.

On the other hand, The Brexit woes posed a challenge to the bulls. Moreover, Fawkish outlook of the Fed indicating at least three rate hikes next year limited the downside for the USD. Hence it creates a cautious outlook before positioning for any further appreciating move in the year-end thin liquidity.

US GDP quarterly report on 22^nd December and US Core PCE Price Index monthly report on 23^rd December framed bearish outlook whereas UK GDP yearly report  on 22^nd December and US Initial Jobless Claims on 23^rd December framed  bullish outlook for the pair

The major economic events deciding the movement of the pair in the next week are US S&P/CS HPI Composite-20 yearly report at Dec 28, UK Nationwide HPI yearly report, EIA Crude Oil Stocks Change, US Pending Home Sales monthly report at Dec 29, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.47% higher than the previous week. Maintaining high at 1.3437 and low at 1.3172 showed a movement of 265 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 1.3489 may open a clean path towards 1.3596 and may take a way up to 1.3754. Should 1.3224 prove to be unreliable support, the GBPUSD may sink downwards 1.3066 and 1.2959 respectively. Chart formation of ascending scallop pattern in H4 chart favors prospects of a bullish trend. Bullish spinning top pattern formation escalates the expectation for a bullish trend.