The Week Ahead for the GBP/USD

On Friday, the British pound took off against the U.S. dollar, sending it toward the top of where it had been over the course of the previous trading week. It ended Friday’s U.S. session at 1.5458, up 0.21 percent for the day, and at the highest closing point of the week. The pair is still down a shade from its two week high, but the closing momentum has set the stage for a busy Monday. The European trading session begins very early Monday morning, before most traders are even awake, but by jumping on this momentum early, you can create a ton of profit before you would normally even start your day.

Of course, trading the European session is only one way to create profits off of the Forex market. Another popular method today involves binary options trading. These allow you to profit off of the price movement without having to worry about things like leverage or staying in a position for too long. If you are still not out of a position at 5 PM Eastern, most Forex brokers will charge you an interest fee. But by taking out a week long binary option, you will not have this fee. How you handle these types of trades should be determined on a case by case basis, but most people prefer not to have to pay extra fees. And that makes your longer term trades involving currency pairs cheaper over the long run in the binary market rather than the Forex market. If you are a Forex trader thinking of moving because of this, ensure that your profit rate will not suffer when you move to binaries so that the lack of a fee is not negated in this manner.

Moving into the next week, there will be a lot of pressure on the USD. This creates the stage for a strong showing by the GBP again, which is exciting for traders of this pair, but this in itself isn’t enough information to act upon. The Bank of England also has pressure, especially from the Quarterly Inflation Report. There will also be a monetary policy decision being released. These are currently scheduled for Thursday. On Friday, the U.S. jobs report will be released. When things like this occur, there is often a lot of speculation that occurs in the days leading up to these events. So, while there will be a lot of action going on between the GBP and the USD, it is likely to be quite erratic and hard to predict. For traders that do not have a firm grasp on technical indicators, and especially candlestick charting, this is a good time to sit back and see whether or not the actions that progress are accurately reflecting what happens with these reports. This will give a much more clear direction of where the GBP/USD is going.

If you are a master of technical analysis, this can be a great time to be in the market because there will be so much reliance upon this by other traders. The shorter term before the expiry of your binary trades, the better. When trades are volatile, you want to limit exposure in the times when you are making trades to help improve accuracy. Perhaps a 60 second binary option is too short for you, but with this, it’s not likely that you will want to go longer than 15 minutes per trade. Having a handful of trades per day with clear entry points, the better off you will be. Having a ton of trades might seem profitable, but if the predictions are not accurate, you will just lose money during erratic trading sessions.