GBP/USD Daily Fundamental Forecast – January 10, 2018

The GBPUSD pair continues to consolidate and trade within a tight range between the 1.35 and the 1.36 regions. So far, since the beginning of the week, the pound has been able to hold itself on its own against the growth in strength of the dollar that has been seen across the markets. The 1.35 region has been acting as good support and this has helped the pound to hold steady.

GBPUSD Moves Sideways

The developments in the UK, especially on the political front where the UK PM May has shuffled her cabinet, has also helped to support the pound for the short term. The cabinet reshuffle from May shows an attempt from her to establish full control over the party and the government and this has been a huge change from a few months back when she seemed to be losing control and support from within her own party.

This shows that she is back in control and proving herself to be a strong leader and this is good for the UK domestically and internationally as well as it would help her government and the leaders to focus more on the Brexit affairs and the ongoing talks and seek out a better deal from their Eurozone counterparts. This has lent a sense of certainty to what we could expect from the UK and this has helped the pound though the incoming data from the UK continues to be choppy. Markets like certainty and this is what has been favoring the pound in the short term.

Looking ahead to the rest of the day, we have the manufacturing production data from the UK and this would be watched closely to see whether the trend of choppy data from the UK is going to be reversed or not. Despite the data, we believe that the pound is in a good space and is likely to be buoyant especially with the support of the political and domestic developments that are happening in the UK.