GBP/USD Daily Fundamental Forecast – April 24, 2017

GBP/USD continues to consolidate and range within a tight range over the past couple of days as the traders and the market digests the gains that the pair had made over the last week. The pair is in a prime position as far as the bull run is concerned as the announcement of quick polls from the UK PM May last week has helped to boost the pound in the hope that the UK would be able to extract much more from the Eurozone with a strong leader with a strong mandate at the helm.

Pound in Consolidation Mode

We had mentioned in our forecasts last week that the region around the 1.2850 price is likely to see a lot of selling and this region could then see a correction towards the broken resistance at 1.2650 region. If the 1.2850 continues to hold (as we expect it to), then we could see a much deeper correction as we approach the elections in June. Most of the markets assume that May would win with a much larger mandate in the June elections but the elections are more than a month away and that is a very long time in politics for anything to happen.

So it is this correction that the traders have to guard against and that is the reason why we feel that selling the GBPUSD pair against the 1.2850 region might be a wise choice in anticipation of a correction in the short term. Even a victory for May does not guarantee anything as far as the Brexit negotiations are concerned and if Merkel wins the elections in Germany with a strong mandate, then we could see 2 tough leaders at the table fighting it out for the UK and the Eurozone as well.

Looking ahead to the rest of the day, we do not have any major news from the UK or the US for today and so expect some more consolidation and ranging on either side of the 1.2800 region.