GBP/USD Fundamental Forecast – September 23, 2016

GBPUSD continued its upward grind during most of the day yesterday, a grind that began sometime after the FOMC announcement. This grind took it past the big round figure at 1.3000 and then through the resistance at 1.3060 and it reached 1.3080 where it was met with some strong selling from traders. Beyond this, there is the round figure of 1.3100 and then on to 1.3170.

Fundamentally, nothing much has changed over the past 2-3 weeks and hence we believe that this trip towards 1.2950 was just a correction and a fall back into the range for the pound. This is the same reason that we expected a bounce from 1.2950 which has proved true so far and we expect this bounce to continue till 1.3170 atleast. Even if the pair decides to make a trip back to the mid or low 1.2900s, we expect the price to bounce back into range and remain bullish. This continues to be a period of ranging and consolidation for the pound post-Brexit as the market tries to figure out the correct value of the pound after the exit. This will not be clear until the details are worked out and that is going to take quite a while.