GBP/USD Daily Fundamental Forecast – October 21, 2016

Yesterday saw the release of retail sales data from the UK which for the first time since the Brexit process began, showed that the data was worser than expected. All the data released since the Brexit process began had been consistently better than expected which showed that the economy of the UK wasnt as bad as was expected and this proved encouraging to investors and traders. But yesterdays retail data disappointed as it came in as 0% showing that there was no improvement at all against the expected value of 0.3%. This disappointed the buyers in the GBPUSD pair and the bears again took control of this pair and pushed it from 1.2275 downwards towards 1.2230.

They were helped in this process by the returning USD strength which picked itself up against all currencies and commodities yesterday showing that the weakening that was witnessed was more a correction of the continuing USD strength than a trend being set.

In other news, the UK PM May said that she was hoping that the Brexit process would be smooth and easy for all the stakeholders involved though it has to be said that it was more a wish rather than something concrete. The Euro and the ECB leaders are in no mood to make it easy for the UK leaders and we believe that we are in for some hard negotiations in the Brexit process, going forward. This would continue to weigh on the global economy and the UK economy in particular, going forward, and this would keep the GBPUSD surpressed. That is why we advice our users to sell any rallies in the GBPUSD as we continue to believe that the pair would be bearish atleast for the next few months irrespective of what happens to the other instruments. Any rally towards 1.2280 and 1.2360 can be sold off as we believe that the pair is headed towards 1.2200 and lower in the short term and maybe even 1.2000 in the medium term depending on how the negotiations progress in the coming weeks.