GBP/USD Daily Fundamental Forecast – August 4, 2017

We had mentioned in our forecast yesterday of how all the focus would be on the pound for yesterday with a large amount of data that would be released during the course of the day. We had also mentioned that though the GBPUSD pair was trading near the highs of its range, the 1.3250 region is likely to be a tough nut to crack. Also, with a part of the market hoping and believing that the BOE would hike rates though it was quite unlikely to do so, for all practical purposes, there was always going to be that part of the market that was going to be disappointed.

GBPUSD Gets Hit by BOE

All of this came true yesterday as the BOE chose to hold rates, which was quite anticipated by most of the market and also something which seems quite logical at this point of time. But what would have caused the bulls some heartburn was the fact that the inflation and the growth outlook was also revised lower by the BOE. The BOE had been one of the main supporters of the economy and the pound over the last couple of months but for them to sound bearish on the economy would have been disappointing for the bulls.

This led to a sell off in the pound after the release of the rate statement and also the inflation report hearings and this caused the GBPUSD pair to drop from the 1.3250 region to below the 1.3150 region as of this writing. Though the pair looks quite weak, the traders may not want to commit themselves too much with the NFP stated to be released later in the day today.

Looking ahead to the rest of the day, the key economic data would be the NFP report from the US which would be watched closely for any signs of reversal in the US economy, which has been throwing up poor data over the last couple of months or so. If the data does come out strongly, then the GBPUSD pair is likely to correct further towards the strong resistance turned support at the 1.3030 region.