GBP/USD Fundamental Analysis – week of March 26, 2018

The GBPUSD pair finally broke through the 1.40 region over the course of last week as the underlying bullishness and buoyancy finally shone through. This underlying sentiment was there for everyone to see over the past few weeks and it needed some strong and fundamental to happen for the pound to get the required momentum and this happened over last week.

GBPUSD Breaks Through

The first was the Fed rate announcement and the press conference where the Fed hiked rates for the first time this year. This was something that was quite expected and hence it was priced into the markets but the fact that the new Fed Chief Powell did not lay out a timeline or committed to accelerated rate hikes was a disappointment for the dollar bulls and this led to a sell off across the pound. This was the momentum that the bulls in the pound needed and they showed their intent by pushing the pair through the 1.40 region and though the 1.41 region as well.

The BOE meeting turned out to be a damp squib with them not letting the markets in on anything that they did not already know. This led to zero impact for the pound and it was only later in the week that there was a correction as the news that the US had imposed tariffs on Chinese goods led to fear and uncertainty that a global trade war is likely to happen as the major economic powers around the world battle it out with each other in order to promote nationalism and their own economy.

Looking ahead to the coming week, there is not much by way of economic data or news as it is the last week of the month when such things dry up. But we are likely to see a lot of month end flows and this is likely to keep the traders busy as the pair looks to the highs of the range around the 1.43 region and looks to break through the same. It is unlikely that the momentum in this pair would be enough to trigger a break through the range highs as the bulls are likely to have lost some energy in the break through the 1.40 region.