GBP/USD Daily Fundamental Forecast – July 18, 2017
After rocketing higher on weak US data on Friday, the GBPUSD pair has been taking some well deserved rest and has corrected back to the region of its break. The uptrend must have been a surprise for a lot of traders but it is something that we had been warning during the course of last week. We could clearly see a lot of buying support in the 1.28 region and once that was confirmed, the only direction was up. The US data did not deserve such a large reaction but it was a measure of the pent up feelings in the bulls that that pound rocketed through higher.
GBPUSD Takes Some Rest
Since this morning, we have seen the dollar continue to weaken across the board on news that 2 more Republicans have now opposed the new healthcare bill and with that, the new healthcare bill is unlikely to go through and Obamacare is here to stay for good. This brings in a lot of uncertainty on how effective the Trump administration is going to be and this is a huge risk for the dollar which is bound to suffer in the short and medium term. The pound has not been able to take full toll of the weakness so far and all it could muster is a move back to the highs of the range.
We could see a much larger reaction to this report when the London session opens and with a couple of economic data and events lined up for the UK later today, we should see some large volatility in the GBPUSD pair in the upcoming session. With the pair having broken through the crucial 1.3030 region and managing to stay above it so far, we believe that the risk is to the upside and the bears would do well to stay well clear.
Looking at the rest of the day, we do not have any major news from the US but we have a speech from Carney and we also have the CPI data from the UK. Both of these are likely to be watched very closely, especially considering the fact that we are probably quite close to a rate hike from the BOE. A strong CPI should strengthen the case for a rate hike and pushed the GBPUSD pair even higher.
This article was originally posted on FX Empire