GBP/USD Fundamental Analysis – week of June 4, 2018

The general weakness in the markets seems to have affected the GBPUSD pair as well as the pair fell below the 1.33 region and went as far below as the 1.32 region during the course of the week. But the pair managed to rebound and recover during the latter part of the week, as most of the markets did and has closed the week clearly above the 1.33 region.

GBPUSD Lower

The market headlines for last week was dominated by the increase risk in the Eurozone due to the uncertainty and the confusion around Italy and this rocked the markets and pushed the euro lower. The pound had been weak already and the move below the 1.35 region over the previous week was just another signal that the pair was about to move towards the 1.33 region and below. This is what happened during the first half of the week as the pair moved towards the 1.32 region and for a brief while, it looked as though the weakness would further continue.

But as we entered into the second half of the week, the situation in Italy began to cool down and this helped the markets to recover and this helped the pound as well. Also, the ADP and the GDP data from the US during the middle of the week was worser than what was expected and this helped the pound to move up even further against the dollar. Though the NFP data came in stronger than expected, that did not seem to have helped the dollar too much and that helped the pound to close the week in a comfortably strong position.

Looking ahead to the new week, the focus is likely to shift away from the dollar and on to other currencies. As far as the pound is concerned, we have the construction and services PMI data that will be released during the early part of the week. We believe that the pound would be due for some consolidation and ranging in the coming days with the 1.35 region, a broken support turned resistance region, likely to help to cap any moves higher during the short term.