GBP/USD Daily Fundamental Forecast – April 21, 2017

GBPUSD continued to trade pretty strongly through the day yesterday though it had a bit of a correction late in the day which has since pushed back the pair into the 1.28 region where it takes some well deserved rest as of this writing. We saw the pair continue to make steady progress during the course of the day yesterday, with the after-effects of the announcement of the UK election in June continuing to help it move higher and higher.

Pound Continues to Trade Strong

The bulls were able to push it through the 1.29 region for a brief while and this short squeeze has managed to achieve what it set out for. It remains to be seen whether this large move up is just a short squeeze which is then likely to lead to a correction back into the 1.21 region in the medium term or whether this run has enough legs, based on fundamentals, to keep the GBPUSD pair buoyant going forward. We believe that it is the latter and we believe that the pair would continue to trade strongly in the short term.

Towards the middle of the US session, we had the US Treasury Secretary Mnuchin confirming that there would be tax cuts in the US which would benefit the corporates and the middle class to a great extent. This helped to bring back the strength in the dollar, which had been on the backfoot during the London session, and this put paid to the GBPUSD rally and pushed the pair back towards 1.28 where it trades as of this writing.

Looking ahead to the rest of the day, we have the retail sales data from the UK and we also have the MPC member Saunders speaking during the course of the London session and we believe that the GBPUSD pair would consolidate on either side of the 1.28 region for today.