GBP/USD Daily Fundamental Forecast – August 25, 2017

The GBPUSD pair continues in a tight range on either side of 1.28 during the course of the last 24 hours as the pair, like almost every other instrument in the market, awaits the outcome from the Jackson Hole meeting later in the day. But the pair looks quite weak and unless there is some fundamental change from the UK, any kind of upmove or bounce would only be viewed as an opportunity to sell.

Pound Unable to String Together a Bull Run

The pound has been on the backfoot ever since the BOE reversed their support for the pound and chose to wait for the Brexit process to get over before they moved in and discussed regarding rate hikes in the future. So, with the hikes ruled out for the near future, the pound has been left to the market forces which have chosen to take a wait and watch approach as the uncertainty around the Brexit process is simply too much for them to risk a large amount of funds at any point of time.

With this scenario, the pound is now guided by the strength in the dollar and also the incoming data from the UK. The incoming data has been choppy at best which has further raised doubts about the effect of the Brexit on the UK economy. The dollar strength has also been waxing and waning over the last few weeks and this has kept the pound under pressure and also raises the possibility of the GBPUSD pair weakening even further towards the 1.26 region in the near future.

Looking ahead to the rest of the day, we do not have any major economic news from the UK but at the Jackson Hole, Yellen and Draghi are expected to make important speeches which has gained the focus of the market and this is likely to bring in volatility in the GBPUSD which is expected to follow the direction that the euro takes.