GBP/USD: forecast for November 2-8
British pound had another volatile week. GBP/USD slipped below 1.5250 as the US Federal Reserve turned out to be more hawkish on its meeting. However, sentiment changed to bullish by the end of the week. The pair formed a bullish engulfing candle on Thursday and the pair jumped back up above 1.5300. The trend line of the bearish channel was broken to the upside.
The next strong resistance is now seen at 1.5390. This is the resistance of the potential wedge pattern (red lines on the chart). We expect the pair to retrace from this level and to retest the last week’s support at 1.5250. Technical picture for the coming weeks remains bearish.
We will watch the block of UK PMIs at the beginning of the new week. Thursday will likely become a volatile day for the cable: the Bank of England will hold its policy meeting and release the quarterly inflation report. According to the most recent data, inflation expectations for the next year declined in October and have stayed below the Bank’s target for 13 months. UK interest rate is widely expected to stay on hold in 2015, so the upside of the pound remains capped.
Chart. GBP/USD Daily