GBP/USD Fundamental Forecast – September 22, 2016

GBPUSD continued to be one of the most volatile pairs in the markets yesterday. It chose to be in a tight range between strong support at 1.2950 and the round figure resistance of 1.3000 for the most part of yesterday till the announcement from the Fed. Post the announcement, it still couldnt make up its mind on which direction it wanted to take as the Fed chose to hold the rates for now and also didnt exactly specify when the rate hikes could be expected.

This confused state of volatility continued for an hour or so after the annoucement and this state was reflected in the other USD related pairs as well. After this period, all these pairs decided to make a slow grind upwards and GBPUSD followed suit as well. There was nothing hawkish from the Fed and this disappointed the markets a wee bit and this was reflected in the slow weakening of the USD. GBPUSD broke through the resistance at 1.3000 clearly and then continued to proceed upwards and sits at 1.3035 as of this writing. The immediate resistance comes in at 1.3060 which can be expected to be tested during the European session. With the USD weakness expected to continue for the next few sessions atleast, a safe and decent target for the next few sessions would be 1.3140-1.3170 and this is expected to hold atleast during the first attempt.