GBP/USD Daily Fundamental Forecast – August 24, 2017

GBPUSD continues to move lower as the pound has been unable to catch a bid over the last few weeks. The pound did move close to the 1.33 region a few weeks back on the back of strong data from the UK and also due to the support from the BOE whose members had been split on a rate hike. But since then, it has been on a downtrend and the break through the 1.3030 region was crucial for the downtrend and with that break done, the pair continues to move lower.

GBPUSD Continues Downtrend

We had mentioned last week that the region around 1.2860 was the next level of support and though the pair took a while to break through that region, it has since continued to move lower and yesterday, we saw the pair move below 1.28 though there has not been much news to drive such a move. The bounces in the pair, brought about by some decent incoming economic data, have also been very shallow and met quickly with a lot of selling which means that the pound is likely to continue its downtrend into the 1.26 region.

The BOE has also given up its support to the pound with Carney making it clear that they would not be considering any interest rate hikes in the near future as they do not want to add to the uncertainty that exists due to the ongoing Brexit process. This has signalled to the markets that it is time to sell the pound and we have been seeing that since then. With free access to the Eurozone continuing to be a matter of conjecture, the pound is likely to be under pressure till things become clear.

Looking ahead to the rest of the day, we have the advance GDP data from the UK which is likely to be bringing in some volatility. But the market waits for the speeches following the Jackson Hole meeting and the GBPUSD pair would hope to piggy back on any kind of bullish run in the euro, if and when it happens, following the meeting.