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GBP/USD Fundamental Analysis – week of November 6, 2017
Colin First
Updated

The pound turned out to be the star of the week, quite unexpectedly as the traders had expected the dollar to be the focus for the week due to the range of data that was to be released from the US during the course of the week. The fact that almost all the data and news events from the US turned out to be misleading ensured that the focus remained firmly on the pound which got literally pounded as the BOE painted a grim picture of the reality.

GBPUSD Hit Hard By BOE Outlook

The BOE was expected to hike rates during its rate announcement and also present a good picture for the future of the UK economy and also promise more rate hikes in the coming months. But though the BOE did hike the rates by 0.25% as was widely expectd, they pained a grim picture of the UK economy as they felt that the Brexit process was beginning to take its toll on the economy and the BOE also pointed out that the inflation was also not meeting the expectations. This grim picture led to a sell off in the pound which fell by almost 200 pips to end the week near the lows of its range.

GBPUSD Daily
GBPUSD Daily

On the other hand, the dollar has some mixed data through the course of the week as the NFP and the ADP data came in mixed including the revisions of the data from the previous month. We also saw the appointment of Powell as the next Fed Chief to succeed Yellen and even this news event had little effect on the dollar as it was something that was widely anticipated.

Looking ahead to the coming week, apart from the manufacturing production data from the UK, there is not much data release from either the UK or the US for the upcoming week. We expect the pound to continue to remain weak. There may be a small bounce in the pound as a form of relief rally but we believe that the dollar would continue to remain steady and strong and this would add pressure on the pound in the coming week.

This article was originally posted on FX Empire

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