GBP/USD Daily Fundamental Forecast – July 12, 2017

GBPUSD turned out to be one of the few pairs which could not capitalise on the weakness in the dollar and corrected lower despite the dollar falling against some of the other major currencies. We have been mentioning over the last couple of days that the pound continues to be the weakest currency against the dollar and this has been proved by its fall over the last few days, against the dollar, from its highs around the 1.3030 region.

GBPUSD Stays Weak

The pound is inherently weak due to the uncertain nature of the Brexit process and also the political turmoil that the UK finds itself in and this is affecting its progress against the dollar. This is one of the reasons why it could not progress against the dollar yesterday. Also, some of the recent economic data point to a weakening economy and though the BOE is doing its best to spur the economy and support the pound, there is only so much that it can do when the fundamentals are weak.

Yesterday, we saw the GBPUSD pair fall through the 1.29 region and it trades just below 1.2850 as of this writing though its cousin, the euro, is up against the dollar. This is a reflection of the weakness in the pound which was brought about by the BOE member Broadbent making less than hawkish comments when he said that he expected the prices to rise after Brexit as it would lead to lesser trade post-exit. With the BOE being the chief supporter of the pound at this point of time, the views of its members are watched very closely and anything less than hawkish is considered as bad for the pound.

Looking ahead to the rest of the day, we do not have any major economic news from the US but we have the average earnings index from the UK which would be watched closely to see if the data improves. Any weakness in the data would not be viewed kindly and the pound would have to face the wrath.