GBPUSD on the weekly chart
The GBPUSD has seen the price move up 3.71% this week at current levels, which is the largest week gain going back to March 2020 covid lockdown.
Looking at the weekly chart, the pair is trading in a swing area between 1.1759 to 1.1840. The high today has reached 1.17997 (call it 1.1800). The current price is just below that natural level at 1.1796 as I type.
The 2016 low price came in at 1.1840 and that would a target level on the upside. The low from earlier this year during the week of July 10 week comes in at 1.17594. The price near 1.1800 is near the middle of that swing area (see red numbered circles).
A move to the upside going forward would have trader looking toward 1.1936 and above that 1.20507. That is the midpoint of the year’s range. It is not out of the question.
In 2022. the high was reached in January at 1.37479. The low reached during the week of September 25 as PM Truss was going through the worst of her mini budget stalled at 1.03535 and bounced sharply.
It seems like a lot in a relative short amount of time and things are not so hot in the UK with the BOE saying that the economy could be in a recession for 2 years if the BOE has to keep tightening. So things are not great.
However, a higher GBP helps to lower inflation which is what the BOE needs.
Moreover, the move to 1.0350 area was more capitulation from poor fiscal policy, that was reversed. As a result, getting to 1.2000 on a corrective dollar decline, is not all that shocking in such a short period of time. I am not saying it is a guarantee, but as long as the technical bias remains positive (the 100 day MA is at 1.1659 and staying above is required to keep that bias), it is a target on a move above 1.1840 for sure.