GBP/USD Daily Fundamental Forecast – August 2, 2017

The GBPUSD pair has also been chopping around for much of the last 24 hours as the spectre of the NFP report is looming large on the markets. The dollar is clearly oversold but we have seen many times in the markets, that an instrument can continue to be oversold for as long as it wants to be and there is nothing that is implied if and when a currency is oversold or overbought. It is likely to be a key week for this pair as we have major data from the US and the BOE as well.

GBPUSD Likely to be Volatile

Yesterday, we saw the manufacturing PMI data from the UK coming in slightly better than expected which would have been a relief for the pound bulls as the data had been mixed over the last month or so which had led to uncertainty and doubts on whether the UK would be able to pull through the Brexit process without much of damage. So far, the UK does seem to be doing well and this should encourage the BOE when it meets to decide on the rates later in the week. Though most of the market does believe that the BOE would leave the rates unchanged, the BOE members were pretty hawkish during the last time that they met and this had led to a belief that there might be a slight chance of a hike.

If that happens, it is likely to be a huge boost for the pound and we should see the GBPUSD pair easily move towards the 1.33 and then on to 1.34 in the short term. We also have the dollar floundering for much of the last month and the dollar bulls would be hoping for some turnaround in the data when the employment reports come in later in the week from the US.

Looking ahead to the rest of the day, we have the construction PMI data from the UK and the ADP employment report from the US and these are likely to be watched closely by both the pound and the dollar bulls. Till that time, we can expect some consolidation in the markets.