GBP/USD Daily Fundamental Forecast – February 15, 2018

The GBPUSD got saved by another round of weakness in the dollar which has set in since the data was released from the US late in the day yesterday. The pound had been under the pump over the last week or so and we had discussed about this in our forecast yesterday and about how it was unable to move higher despite the fact that the dollar was weak across the board.

GBPUSD Moves Through 1.40

This would have led to a lot of fear among the pound bulls as a return of the dollar strength would have meant that the pound would have had to suffer even more. The focus was on the dollar yesterday with the inflation data and the retail sales data set to be released and the market was hoping that some strong data would lead the Fed to consider accelerated rate hikes in the coming months. But the CPI data came in stronger than expected and the retail sales data came in much weaker than expected. Even the inflation data, on second look, showed that it was almost neutral on a year on year basis and after a initial move lower, all the losses were immediately reversed on this pair.

The pair shot higher from then on and this has continued higher as of today morning as well as the pair moved through 1.39 and then through 1.40 during late night trading and for now, it continues to trade in that region. The dollar looks very weak at this point of time and though the data has not been especially bad, it would mean that the Fed would have a tough time to hike more than 3 times this year. For now, the pound seems to have been saved from a tough time and it should see it moved higher in the coming days.

Looking ahead to the rest of the day, we do not have any major news from the UK but we have the PPI data from the US which is likely to have an impact on the dollar strength. The break through 1.40 has not been very strong and hence the traders need to be careful about jumping to conclusions as far as the next short term direction is concerned.