- GBPUSD ↓ almost 2% MTD
- “Golden cross” chart pattern signals potential bullish move
- Political risk + UK data dump + USD performance = heightened volatility?
- UK CPI forecast to spark moves of ↑ 0.2% & ↓ 0.5% over past year
- Technical levels – 1.3650 & 1.3450
First Health Secretary Wes resigned and now Andy Burnham is eyeing the top job.
UK Prime Minister Kier Starmer’s cabinet is crumbling with a full-blown leadership challenge rapidly becoming a reality.
For GBPUSD this means one thing: extreme volatility.
With geopolitical developments and key data and corporate earnings also in the mix, there’s no shortage of catalysts to watch in the week ahead:
Sunday, 17th May
- Israel-Lebanon ceasefire is due to expire
Monday, 18th May
- CN50: China property prices, retail sales, industrial production, fixed-asset investment
Tuesday, 19th May
- AU200: Australia Westpac consumer confidence, RBA policy meeting minutes
- CAD: Canada CPI, building permits
- JPY: Japan GDP, tertiary industry index, industrial production
- GBP: UK jobless claims, unemployment
Wednesday, 20th May
- CN50: UK jobless claims, unemployment
- EUR: Eurozone CPI
- GBP: UK April CPI
- NAS100: Nvidia earnings
- USDInd: US FOMC minutes
Thursday, 21st May
- AUD: Australia unemployment
- EUR: Eurozone S&P Global manufacturing PMI, consumer confidence
- GBP: UK S&P Global manufacturing PMI
- US30: Walmart earnings.
- USDInd: US initial jobless claims, S&P Global manufacturing PMI, Philadelphia Fed business outlook
Friday, 22nd May
- CAD: Canada retail sales
- EUR: Germany IFO business climate, GDP, GfK consumer confidence
- JPY: Japan CPI
- GBP: UK consumer confidence, retail sales
- USDInd: US University of Michigan consumer sentiment
GBPUSD has hijacked our attention after forming a “golden cross” pattern on the daily charts.
Note: A golden cross is when an asset’s 50-day simple moving average (SMA) crosses above its 200-day SMA. This event indicates that prices may push higher.
Could political chaos throw a wrench in the works for bulls?
Nevertheless, a major move could be on the horizon and here are three reasons why:
1) Britain’s political crisis
The threat of a leadership contest is bad news for the UK economy that is already dealing with the fallout of the Middle East conflict.
A win for Wes Streeting probably means continuity but if Andy Burnham takes the spot, investors are likely to be concerned that he may pursue a looser fiscal policy.
Nevertheless, the extended period of uncertainty may spook investor attraction toward the British Pound.
Note: Prediction markets see a less than 50% chance that Stermer will be out of power by June 30th. Nevertheless, things could flip given the fast moving nature of the UK political scene.
2) UK data dump
A string of high impact data releases could provide key insight into how the economy fared in the face of geopolitical risk and surging energy prices.
On Tuesday, the latest employment report will be published, followed by the April CPI data on Wednesday, PMIs on Thursday and UK retail sales on Friday.
Much attention will be given to the CPI which may heavily influence how soon the BoE will hike interest rates in 2026. Ultimately, signs of rising inflationary pressures are likely to fuel speculation over the BoE acting sooner rather than later.
Note: Traders are currently pricing in a near 30% chance of a BoE hike by June.
3) Dollar volatility
A combination of ongoing geopolitical risk and US data could inject fresh volatility into the US dollar. Any signs of easing tensions in the Middle East may weaken the dollar while signs of mounting conflict may boost prices as investors rush to safety. Incoming US data is likely to impact expectations around what actions the Fed takes in 2026.
Note: Strong USD -> Bearish for GBPUSD. Weak USD -> bullish for GBPUSD.
4) Technical forces
The GBPUSD has secured a solid daily close below the 1.3450 support level.
- A daily close back above 1.3450 may trigger an incline toward 1.3550 and 1.3650.
- Sustained weakness below 1.3450, may see prices test 1.3350 and 1.3239 – lower bound of the Bloomberg FX model.
