Trade of the Week: GBPUSD capped below 200-day SMA?

<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a> </strong></p>
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<ul>
<li>GBPUSD bulls rejected by 200-day SMA</li>
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<li>Big week for currency pair due to key UK data</li>
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<li>Watch out for potential dollar volatility amid high-risk events</li>
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<li>Prices back within wide range on daily charts</li>
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<li>Bears could mean business below 1.2320 level</li>
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<h3><strong>GBPUSD bears could mean business after dragging prices back below a key resistance level.</strong></h3>
<p><img loading="lazy" decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user17/GBPUSDDaily1.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="14ede59a-9512-4972-8115-7925c4ec2475" data-src="/s3-static/users/user17/GBPUSDDaily1.png" /></p>
<p>Despite punching above the 1.2320 level earlier this month, bulls were halted below the 200-day SMA which saw prices slip back within a wide range on the daily charts.</p>
<p><img loading="lazy" decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user17/GBPUSDDaily2_3.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="98b8db66-cbab-4bd4-a54e-efc0f6ba478b" data-src="/s3-static/users/user17/GBPUSDDaily2_3.png" /></p>
<p><em><strong>The GBPUSD has been stuck within this range since late September with key support at 1.2080.</strong></em></p>
<p>Given the barrage of economic reports from the United Kingdom and various events that could rock the dollar – a significant move could be on the horizon for the GBPUSD.</p>
<p><strong>Here are 3 factors to watch out for this week:</strong></p>
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<h3><strong>Key UK data </strong></h3>
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<p>The string of key UK economic data this week could offer fresh insight into the health of the economy and influence expectations around the BoE’s next policy move.</p>
<p>On Tuesday, all eyes will be on the <strong>latest employment report</strong> and speech by Bank of England chief economist Huw Pill speech. The jobs data is likely to offer more clarity on the health of the labour force with <strong>wage growth</strong> in sharp focus. Wednesday sees the highly anticipated inflation data for October which is expected to <strong>see a sharp drop amid lower energy prices.</strong> This is topped off with <strong>retail sales</strong> on Friday and a speech by Bank of England Deputy Governor Dave Ramsden.</p>
<h3>As of writing, traders are currently pricing in a 1 in 10 chance of a 25-basis point BoE hike in December.</h3>
<ul>
<li>Sterling is likely to weaken towards the 1.2080 support as <strong>more signs of a slowing jobs market and cooler-than-expected inflation data reinforces expectations around the BoE being finished with hikes.</strong></li>
<li>The pound could receive a boost towards the 1.2320 level if higher than expected UK economic data <strong>including inflation revives bets around another BoE hike beyond 2023.</strong></li>
</ul>
<ol start="2">
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<h3><strong>Dollar volatility </strong></h3>
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<p><strong><a href="https://www.forextime.com/market-analysis/week-ahead-us-dollar-gears-big-move">As highlighted in our week ahead report,</a></strong> the dollar could experience heightened volatility this week.</p>
<p>It is set to be influenced by not only the <strong>incoming US inflation data</strong> on Tuesday but a string of significant reports throughout the week and speeches by numerous Fed officials. On top of this, the threat of a <strong>potential US government shutdown on Friday</strong> may add to the expected volatility, placing the dollar on a rollercoaster ride.</p>
<ul>
<li>The dollar could receive a boost if the <strong>US inflation data beats forecasts,</strong> overall economic data is encouraging, and the <strong>US government strikes a deal before the deadline</strong>. This development may drag the GBPUSD lower.</li>
<li>Should the <strong>US CPI report print softer than expected</strong>, economic data disappoint and the US <strong>government experiences a shutdown</strong>, the dollar could be in the firing line. A weaker dollar has the potential to push the GBPUSD higher.</li>
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<h3><strong>Technical forces </strong></h3>
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<p>On the weekly charts, <strong>the close back below 1.2320</strong> has placed bears in a position of power with prices trading below the 50, 100, and 200-week SMA.</p>
<p><img loading="lazy" decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user17/GBPUSDWeekly_16.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="5ded5a8e-0a78-429d-9af6-56edecd550e3" data-src="/s3-static/users/user17/GBPUSDWeekly_16.png" /></p>
<p>Zooming back into the daily, we see a breakout/down opportunity with prices touching the 50-day SMA as of writing.</p>
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<h3><strong>A solid daily close above 1.2320</strong> may encourage a move back toward the <strong>200-day SMA at 1.2430 </strong></h3>
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<h3>Should prices fail to push <strong>back above 1.2320</strong>, bears could drag the currency pair toward the next <strong>key support at 1.2080 and 1.1930 – a level not seen since February 2023.</strong></h3>
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<p><img loading="lazy" decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user17/GBPUSDDaily3.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="da28d983-b3cd-4f93-b2b2-5e1b2d7e0dd9" data-src="/s3-static/users/user17/GBPUSDDaily3.png" /></p>
<h3>According to Bloomberg’s FX forecast model, there’s a 73% chance that GBPUSD trades within the 1.2109 – 1.2396 range this week.</h3>
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<p><img loading="lazy" decoding="async" class="size-full wp-image-54242 alignleft" src="https://www.investmacro.com/articles-analysis/wp-content/uploads/2014/07/Forex-Time-Logo.png" alt="Forex-Time-Logo" width="262" height="90" /><strong>Article by <span><a href="https://www.investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></span></strong></p>
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