GBP/USD Daily Fundamental Forecast – February 5, 2018

The GBPUSD pair corrected lower on Friday on the back of a recovering dollar. The pound continued to hold fairly steady but the dollar was boosted by the incoming data which helped it to climb against a few of the important currencies but as we have been saying before, this is just a continuation of the correction in the pair and does not mean much in the larger scheme of things.

GBPUSD Moves Lower

What should keep the traders interested is to see what happens in the 1.40 region if and when the prices arrive there. As we had mentioned before, the 1.40 region is likely to be the battleground for the bulls and the bears to finally decide on who controls the pair in the short and medium term as well. The pair had made a range high just above the 1.43 region on the back of pound strength due to the progress in the Brexit process but so far, it has not been able to make much further progress.

We believe that the dollar would become the focus once again in the coming days as the market looks forward to some action from the Fed. The traders believe that there are 3 rate hikes from the Fed this year and the incoming data, including the NFP last Friday, has been strong enough to keep those thoughts alive and this has helped the dollar to stay above the water for now. The market also secretly hopes that the Fed would be able to hike for more than 3 times this year and if that happens, the dollar would get a huge boost.

Looking ahead to the rest of the day, we do not have any major economic news from the US or the UK for the day and hence we can safely expect the pair to continue consolidate above the 1.40 region as the market awaits the BOE later in the week.