GBP/USD Daily Fundamental Forecast – January 19, 2018

The pound continued to be bullish and rose higher after finding some support in the 1.3820 and it currently has pushed through the 1.39 region and trades above that region as of this writing. The pound has been relentless in its move higher over the last few weeks and even the periods of correction have been met with some strong buying which has led to some quick and sharp bounces in the price.

GBPUSD Heads for 1.40

A part of this bullishness in the prices of the pound is due to the fact that the market expects a soft Brexit as part of the talks that are going on with the Euro leaders. The market expects the Eurozone leaders to be ready to give away a lot more of trade concessions and other benefits to the UK than what was originally expected and this had led the investors to believe that the UK economy would not be as hard hit as it was originally expected. This has helped the pound to reverse some of its losses that it had suffered once the Brexit process was initiated.

Also, with the pair crossing through the 1.38 region, the large round figure of 1.40 is an attraction for the bulls and we had mentioned that in our forecast yesterday. So the progress towards that region has been going on in a slow and steady manner. We have also had reports yesterday that the BOE members are not too concerned about the rise of the pound as yet as opposed to the ECB members who seem to be worried about the rise of the euro.

A combination of the above factors, along with the fact that the dollar has lost some of its shine in the short term, has led the pound higher over the last few weeks. We have the retail sales data from the UK coming in later in the day and if that comes out strong, then we should see the prices move quickly towards the 1.40 region.