GBP/USD Daily Fundamental Forecast – December 08, 2016

GBPUSD turned out to be one of the weakest pairs in trading yesterday as several factors contributed to the weakening of the pound during the course of the day. On the data side, the Manufacturing Data came in at a weak -1.3% against the expected value of 0.2% and this was a real shocker as it showed that the manufacturing was becoming lesser every month and some of it has to be attributed to the Brexit process that has been taking place. This began the pound push lower but more was to follow.

There was a lot of chatter about the Brexit process and how it will handled on the UK side and the Eurozone side. There was a motion surrounding the Brexit discussion in parliament that was put to vote by the Labor Party and then there was news that the person who made the case about the Parliament discussion arguing that his case would not be affected by the outcome of the motion. Then there was more talk during the course of the debate about some members wanting to have a final vote in Parliament after the EU deal is negotiated by the UK. If most of this was just fluff rather than anything substantial, what it does bring to light is the fact that the Brexit process is going to be very cumbersome and would involve the opinion of a lot of people rather than it being a straightforward process.

This in itself would be a huge risk to the pound and with such headlines popping up every week, it would be very difficult for the pound to get a decent bull run going. Also, with many governments changing in the different Eurozone countries, there is not even people with whom the UK can begin discussions in a modest way. All this news pushed down the GBPUSD pair below 1.2600 and it traded around this region for the rest of the day and has since recovered a bit this morning.

Looking ahead to today, there is no major news out of the UK for the rest of the day though the ECB press conference could have an effect on the pound due to its relation to the Euro through the EURGBP pair.