GBP/USD Daily Fundamental Forecast – February 12, 2018

The pound has not been able to get out of the bearish rut that it seems to have got itself into over the last few days. After enjoying a large bullish run since the end of last year, which saw it rise by over 800 pips during this period, the GBPUSD pair has been hit hard over the last couple of weeks.

GBPUSD In Bearish Mode

This bearish run during this period has seen it give up most of the gains that it had made during the bull run and now the bears seem to be in total control. The fact that this has been happening when the Brexit process is going on as planned and there has been much progress should make the bulls worried. There are also reports that say that the UK would get a softer Brexit than what was originally expected and this should have been a large boost to the pound under normal circumstances.

But the strength of the dollar, that has been growing over the last couple of weeks, and the weakness in the pound has served to reverse most of the gains. Of these, the weakness in the pound is what seems to be the most confusing part for most of the investors and the traders as the pound has not been able to gain despite the hawkish stance of the BOE. The BOE was expected to be neutral in its statement and outlook but last week, it indicated hawkishness which showed that it was intent on hiking rates to keep pace with the rate hikes being carried out by the other central banks around the world. But even this has not been able to enthuse the pound bulls and the pair continues to trade below the crucial region of 1.40.

Looking ahead to the rest of the day, we do not have any major economic data from the US or the UK and so we can expect some more consolidation from the pair below the 1.40 region. We expect the dollar to weaken over the coming days and with a host of data from the UK and the US scheduled to be released over the next few days, we expect the pair to be volatile and it remains to be seen whether the bulls would be able to gain back the 1.40 region.