GBP/USD Daily Fundamental Forecast – August 3, 2017

All eyes will be on the pound today with a huge amount of data and economic events lined up from the UK today. We have the UK inflation hearings and also the BOE rate announcement and statement as well. We also have the BOE Governor Carney making a speech today and all of these events are likely to bring in a lot of volatility in the GBPUSD pair.

GBPUSD Likely to Correct Lower

The BOE had been hawkish in their meeting last time which has led to some hopes in certain parts of the market that there might be a rate hike this time or sometime very soon. 3 of the BOE members had voted for a rate hike last time and this is one of the major reasons for the confidence in certain parts of the market. But this is only a small section of the market as the majority continues to believe that the BOE would be on hold.

This seems the logical approach considering the fact that the UK financial circles continue to be in turmoil due to the Brexit process and things are yet unclear about what could be the likely outcome of the Brexit negotiations, which will in turn determine whether it is going to be a hard Brexit or a soft one. With so many unknowns, it is unlikely that the BOE would want to add a rate hike into the mix and it is likely that they would wait to see the outcome of the Brexit process before they decide to move.

Yesterday, we saw the GBPUSD pair continue to consolidate and range near the highs of its range, which is expected ahead of such an important day as today. If the BOE continues to be on hold today, then we are likely to see the GBPUSD pair correct and then the 1.3250 region would act as the ceiling for now.