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GBP/USD Fundamental Analysis – week of October 3, 2016 – Forecast

By:
Colin First

One look at the GBPUSD chart for the week would tell you what kind of week it has been for the pound. A 150-pip range week when the daily average range

GBP/USD Fundamental Analysis – week of October 3, 2016 – Forecast

One look at the GBPUSD chart for the week would tell you what kind of week it has been for the pound. A 150-pip range week when the daily average range for the pair is between 100-120 pips under normal circumstances. This week, the pound had been under the control of month end currency flows, especially in EURGBP. The UK has to pay more than a billion pounds to the EU as part of its membership and usually, this payment goes through during the last week of the month. This affects the EURGBP price which in turn controls the pound.

Try as it might, the pound could not break through its tight range of 1.2950 and 1.3060 though the pound did have a quick dip towards 1.2915 a couple of times. A dip that was quickly followed by a bounce. This week also did not have much of major news from the UK and this further contributed to the lull in the pound.

GBPUSD Weekly
GBPUSD Weekly

The upcoming week is something to look forward to for the pound traders. It is the first week of the month when there is a lot of action in terms of major economic news. We have the UK manufacturing PMI which is to be released on Monday and where a decline is expected. The data post-Brexit has managed to beat market expectations so far and the bulls will be hoping for a repeat of the same on Monday. The bears, on the other hand, hope that the data fails this time which would help them to finally pounce on this pair and successfully manage a clean break through 1.2915-1.2950 and get the GBPUSD in their grip for the forthcoming week. We also have the construction PMI on Tuesday and then the biggest of all news every month, the NFP coming in on Friday. All these events are expected to add some much needed volatility and liquidity to the markets and hopefully break some ranges and make it an interest trading week for the day traders and the investors as well.

We expect a bullish week for the pound after 2 weeks of consolidation but the week, as pointed out above, will be driven by data. All in all, an interesting week ahead.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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