GBP/USD Daily Fundamental Forecast – January 11, 2018

With the focus of all the attention being on the dollar and the stock markets, the pound has not had much to do since the beginning of the week. There has not been much news emanating from the UK and this has weighed on the pound which has been unable to continue on the bull run that we saw in the pair during the last 2 weeks of December. But what should keep the bulls happy is the fact that the pair continues to trade near the highs of its range.

GBPUSD Still in Range

There was a brief attempt to break through the 1.36 region during the last week but since then, the pair has been content to trade in a tight range between the 1.35 and 1.36 region for the short term. This should not be a surprise for the traders in this pair as the fact that the Brexit talks are progressing as planned and the fact that the UK PM May has been able to establish more control over her party and her government over the last couple of weeks has helped to keep the pound buoyed during this period.

This has helped to neutralise the effect of the strength in the dollar that we have been seeing all across the markets over the last couple of weeks. This is also one of the reasons for the tight ranging and consolidation. Yesterday, we saw the pair push through the 1.3550 region for a brief while on the back of news that China might curtail its purchase of US debt and this pushed the dollar on the backfoot. But the effect of that was only minimal as the pair soon reversed and now we see the pair trading just above the 1.35 region as of this writing.

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 should bring in some volatility. The market would also be looking at fundamental events to drive the prices further.