GBP/USD has been quite impulsive with the recent bullish momentum. The price is expected to extend a climb until the BREXIT decision is taken next month.
Recently Bank of England's Governor Mark Carney spoke about the BREXIT scenario without a deal which would bring in a greater risk for the financial services stability. According to Carney, "the biggest issue from a financial stability perspective, from a market integrity perspective, from continuity perspective, is a no-deal scenario by the end of March". The UK is due to leave the EU on March 29th but the the question is still open whether Brexit will take place with or without a deal.
Additionally, UK Prime Minister Theresa May and President of European Commission Jean-Claude Juncker recently agreed that the work on the BREXIT agreement should be concluded before the European leaders' summit slated for March 21. Today the UK Inflation report hearings is going to be held which will inject good volatility in the market which might push the price on either way possible.
On the other hand, the US economy has been operating at full employment with the FED having reached the 2% inflation target. Most of the FED officials are quite positive about growth rates of the domestic economy and want the funds rate to be held unchanged and sustain the growth further. However, the US economic growth has been dented by headwinds like the government shutdown and the trade protectionism. According to FED's Kaplan, the US central bank is currently looking forward to boost employment further. The unemployment rate at 4% is quite favorable and better than what the policymakers expected.
At present, the missing element to boost economic growth is solid economic reports from the US. If upbeat data comes true, this will encourage impulsive gains on the USD side in the coming days. Today FED Chairman Powell is going to deliver a semi-annual testimony. His speech is expected to contain optimistic notes. CB Consumer Confidence report is expected to increase to 124.8 from the previous figure of 120.2.
Meanwhile, GBP has been quite impulsive with the recent gains. However, GBP strength could weaken if the US comes up with better economic data alongside FED's events throughout this week. Though the pair is set to trade with higher volatility, USD has a greater chance to gain momentum this week.
Now let us look at the technical view. The price is currently moving higher with a target towards 1.3200-1.3300 resistance area from where upon formation of Bearish Divergence, the price is expected to reject bulls and push lower with a target towards 1.30 support area in the coming days. As the price remains below 1.3300 area, the chance of intervention of the bears is quite high. On the contrary, a break above 1.3300 area is expected to lead to further bullish pressure in the pair which might take the price towards 1.3500 resistance area in the future.
The material has been provided by InstaForex Company - www.instaforex.com