GBP/USD Daily Fundamental Forecast – August 8, 2017

The GBPUSD pair was caught in a tight consolidation and ranging mode for much of the day yesterday, which was the general trend all across the markets, considering that it was a Monday and it is summer as well. The liquidity and the volatility in the markets was pretty much low and this continued to be the case through the day. The bears did try to take advantage of this low liquidity but the bulls managed to hold their ground and so far, it is a stalemate between both group of traders.

GBPUSD Looking Weak But Steady

The pair is clearly weak on the back of the failure of the BOE to hike rates last week, which was a tad disappointing for much of the markets. Also, the BOE had presented a bleak picture for growth and inflation and this added to the weakness in the pound last week. We also saw the recovery of the dollar at the same time, on the back of a strong NFP and wages report and this has led the pair to correct by more than 200 pips to reach the strong resistance turned support at 1.3030 region.

Yesterday, we saw an attempt to break through this region and we had noted that this region is likely to be key for the further progress in the pound. So, the bulls had to make a stand at that point of time and they did that and from the low 1.3000s, we have seen the pair make a good bounce and it now trades in the 1.3050 region as of this writing. Yesterday, we also saw the UK government refute reports that said that the UK had to pay a bill of 50 billion pounds to leave the Eurozone and get access to the Euro market. Though this did not bring in much reaction in the pound, we believe that this is likely to be positive for the pound.

Looking ahead to the rest of the day, we do not have any major economic news or event from the UK or the US for the day and so we are likely to see the consolidation continue today as well. We are still slightly bullish on the GBPUSD pair mainly due to the reason that we believe that the dollar is still not out of the woods yet.