GBP/USD Daily Fundamental Forecast – August 30, 2017

The GBPUSD pair followed the template laid out by the euro as it ended the day unchanged though it had a lot of volatility during the course of the day. The first half of the day was marked by the weakness in the dollar which helped to push the pair above 1.2950 during the day but later, as the dollar strength returned, we saw the pair correcting below the 1.2950 mark and ending the day unchanged.

GBPUSD Ends Day Unchanged

The UK market got its first chance to react to the speeches from Draghi and Yellen from last Friday and as expected, they reacted by selling the dollar across the board. The lack of support for the dollar from Yellen despite its weakness of late was loud and clear and this was a signal for the traders to sell the dollar and they did not need a second invite. This helped the GBPUSD pair to move through 1.2950 and heard towards 1.30 but it was stopped well short of that by some heavy selling.

This led to a correction in the pair which has now helped it to move towards the support region at around the 1.2920 region as of this writing. With the month end approaching, we expect some month end currency flows to affect the pound in the short term. With the Brexit negotiations ongoing, we also expect that uncertainty to weigh on the pound as well. But with the dollar continuing to be weak, the GBPUSD pair might still have some legs left for it to climb to the 1.3030 region in the short term.

Looking ahead to the rest of the day, we do not have any major news from the UK but we have the Preliminary GDP from the US and also the ADP employment report, both of which are likely to bring in a lot of volatility in the GBPUSD pair and this may provide a chance for the pair to climb towards 1.30.