GBP/USD Daily Fundamental Forecast – March 13, 2018

The GBPUSD pair continues to trade in a buoyant manner over the last 24 hours as some positive developments surrounding the Brexit process has helped the pound to move higher against the dollar. The dollar has also been on the backfoot over the last couple of days mainly due to the fact that the wage earnings came in weaker than expected and this weakness in the dollar has been utilised well by the other currencies to move higher against the dollar.

GBPUSD Buoyant

The lower wage earnings has offset the strong employment data in the form of NFP and though this is unlikely to alter the plans of the Fed for now, it is has led to slight confusion and uncertainty on whether this would become a trend in the coming months and if it does, then it would mean that the dollar would continue to remain weak as the hands of the Fed would be tied. The Fed is highly dependent on the incoming data for the timeline of its rate hikes and hence any weakness in the data would lead to additional delays.

The weakness in the data from the US is something that has been missing over the last couple of months and this has led to confirmation regarding the rate hike from the Fed this month. But for the market to achieve its goal of 4 rate hikes this year, it is important for the incoming data to remain good. On the other hand, the data from the UK has been steady at best but it has been supported by a hawkish BOE and also the smooth progress so far, in the Brexit process has also helped.

It was some quiet trading yesterday and the pair did make an attempt to break through the top of the range and reach the important 1.40 region but failed. The pair has been caught between the support at 1.38 and the resistance at 1.40 and these 2 areas have been holding the price in the short term. We are likely to see some volatility today with the release of the annual budget from the UK and the inflation data from the US and it remains to be seen whether this would be enough for a breakout.