GBP/USD Daily Fundamental Forecast – October 10, 2016

After the historic day on Thursday evening, GBPUSD had a volatile day on Friday as the market began to digest the historic move and tried to find out orders on either side to see how much moves was possible under what ranges, where the big orders were sitting etc. So, this made the pair roam about freely as the traders and investors took it this way and that to find out where it can be moved to. It was a general flow in the markets to check the orders and this led to some 240 pip volatility. A point to note in all this was the fact that though the pair fell 800 pips, it recovered 600 of those pips during the course of the day which leads credence to the fact that the fall was not due to something fundamentally wrong with the UK economy but maybe some algorithms or option related selling that was causing this issue.

Looking ahead now and there is no news out of the UK for today. Today is a holiday for the Japanese, US and Canadian markets and so traders can expect the market to have low liquidity. Looking at the price action on Friday, we can see that there is some support at 1.2200 and some resistance at 1.2500 which should hold the price action for today and maybe for a few more days. The FOMC meeting statement would be released and we expect it to be a rehash of most things that are already known or have been said. So, though there might be some volatility around the news time, we do not expect any major changes to happen to any major market movements to happen.

Our general advice to traders over the next couple of days is to stay away from this pair atleast for the next few days to let the dust settle down and see the direction where the pair wants to take. Though supports and resistances are slowly getting defined in these new historic price ranges, it will take some time for them to get well-defined and it is advisable to wait till that time and let the markets guide us.

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