GBP/USD Daily Fundamental Forecast – October 20, 2016

Yesterday was a day that was marked by GBPUSD making repeated attempts to break through the strong selling region at 1.2320 and each time it tried, it failed but you have to give it to the bulls for making so many tries within a single day. A point to note here is the fact that despite the repeated failures to break through, the pair continues to sit at its range highs and sits at 1.2295 as of this writing. The fact that it has not fallen through as yet should give some hope for the bulls that they might be able to break through finally sometime soon but they need to be doing a quick job of it else they run the risk of getting tired and then being overwhelmed by the bears sitting in this region.

Yesterday, we saw the claimant count change data coming up better than expected which continues the trend of better than expected data from the UK ever since Brexit happened. But with the large fall a couple of weeks back and also the confusion surrounding the Brexit process continuing to torment the traders, even the good economic data is not able to give the much needed push to this pair.

Looking ahead to today, we have the retail sales data being released from the UK and going by the trend over the last few weeks, we could again probably expect some good data. If that happens, we could finally see the resistance at 1.2320 being broken but the next resistance at 1.2370 will immediately come into view. If the data is as per expectations or bad, then we can expect a drop in the pair back towards 1.2200. We continue to be bearish in this pair and any upmove in this pair towards the resistance at 1.2320 and then 1.2370 would be viewed as an opportunity to sell. The risks surrounding the Brexit process and the statements made by the Euro and ECB leaders to make the Brexit process as stringent and difficult as possible are simple too big a risk to be ignored and that is the reason why we believe that this pair simply cannot get a serious bid going despite improving data.

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