The pound continued to consolidate and range with no specific direction. The range continues to get tighter and tighter and it is only a matter of time before there is going to be a large breakout. It remains to be seen on which direction the breakout is going to be but if and when it happens, we can safely expect a move for 300-400 pips. We continue to believe that the risk is to the downside on the GBPUSD pair due to a combination of the weakness in the pound and the upcoming strength in the dollar.
That strength of the dollar is likely to be tested today when Trump addresses his first formal press conference since last July and the market would be eagerly watching this to see if he spells out or gives some hints about some of his campaign topics and what kind of approach he is likely to take with regards to relations with the neighbours of USA and the trade relations with the largest economies of the world, especially China. It would be good for the dollar if he sounds more diplomatic than usual and chooses to take a middle path rather than trying to spew venom. If he does sound mellowed down, then we could see a boost for the dollar which is then likely to place the GBPUSD pair under great pressure. The pressure on the pound hasnt yet eased with the risk and the confusion over the Brexit pressure continuing to hang around it but for now, it is all about the dollar.
Looking ahead to today, we have the manufacturing production data from the UK and we will be seeing whether the UK is able to continue the trend of good data that we have been seeing from it over the past few months, with no effects of the Brexit process as yet. Any slip in this data would only add to the pressure on the pound. Apart from the crude oil inventories, there is no other major economic news to be released from the US for today.