GBP/USD Daily Fundamental Forecast – January 16, 2017

The GBPUSD pair finished the week last Friday on a very weak footing and has been finding it difficult to make and hold on to some of its gains. It is indeed a scary thought for the pound bulls to note that if the pair cannot hold on to its gains when the dollar is quite weak across the board, the pair is bound to suffer if and when the dollar strength returns in due course of time. The pair finished the week below 1.2200 again last week and over the weekend there has been an increasing fear that it would be a hard Brexit. This has caused the pair to open with a huge gap today as it traded below 1.2000 for a brief while and looks set for further losses.

It is indeed a bit confusing that the economic data from the UK over the past few months continues to show strength but the same has not been reflected in the value of the pound. It is to be noted that the pound will survive this phase and will eventually be set to gain but until then, the bulls have to bear the brunt as the bears run riot. It is the risk and the confusion involved over a hard Brexit that is making the investors and traders think twice before buying the pound. Over the last couple of weeks, it has become more or less certain that the UK is going to have a hard Brexit and it is expected that their PM May is likely to specify so much in her speech that is scheduled for this week. This is likely to give a tough time for the UK and its economy during and immediately post the Brexit process but we believe that the UK will ultimately come out stronger.

Looking ahead to today, there is no economic data to be released from the UK for the rest of the day and so we can expect some more losses in this pair during the course of the day with an ultimate short term target of 1.17.