GBP/USD Daily Fundamental Forecast – January 15, 2018

The pound continued its rise on Friday as the momentum generated from the break higher through the 1.36 region has been carrying on and pushing the pair through the 1.37 region as well, over the last couple of days. The pair has continued to trade above this region today as well and it remains to be seen whether there would be a correction this week with a host of news from the UK scheduled to be released later in the week from the UK.

GBPUSD Likely to be Volatile

The Brexit deal is back in sight with many leaders from both sides, pitching in with their thoughts over the weekend. The Brexit process had been in the shade over the past few weeks due to the various intervening holidays but it is set to assume the limelight over the next few weeks as the talks continue. On Friday, we saw the GBPUSD pair get a boost from the fact that the dollar has been on the backfoot all across the board. The dollar has been weak since the beginning of the year and there has been no respite for the dollar ever since.

On Friday, we also saw the Spanish and the Dutch express their willingness for a soft Brexit as far as the UK was concerned and this raised the possibility that the UK could get a good deal from the talks and easy trade access as well But it is likely that Germany has the bigger say in these matters and with Merkel sorting out her coalition issues and firmly back in the saddle, it is likely that she would focus her efforts fully on the Brexit deal and get the best deal for Germany and the Eurozone as a whole.

There have also been apprehensions that the UK could still walk out with no deal but as we have been saying all along, such a consequence would not be good for either the UK or the Eurozone and hence it is likely that they would want to avoid this eventuality. Looking ahead to the rest of the day, it is a bank holiday in the US while we do not have any major news from the UK. It is the first day of the week and hence we are likely to see some consolidation with a bearish tinge.