GBP/USD Daily Fundamental Forecast – July 27, 2017

We had mentioned in our forecast yesterday that the support region in the GBPUSD pair seems to have risen from the 1.28 region to the 1.30 region and that this region would be the line in the sand going forward. This turned out to be correct as we saw the pair use this region as the platform to launch its next leg of the bullish run, making use of the weakness in the dollar.

GBPUSD Continues Higher on Dollar Weakness

It has to be noted here that the entire move over the last couple of weeks has to do more with the weakness in the dollar than any major strength in the pound. The pound continues to be under pressure over the last couple of weeks due to the risks and the uncertainties surrounding the Brexit process and also due to the mixed data from the UK during this period. But, the GBPUSD pair has been helped by the weakness of the dollar across the board. The dollar has been so weak that even the pound has been able to make progress against it and it looks good for 1.32 in the short term.

Yesterday, we saw another round of dollar weakness which followed the FOMC meeting minutes released late in the day. The minutes did touch upon the monetary policy and the balance sheet but there was not much by way of support for the dollar and this led to the dollar being sold once again and this helped the GBPUSD pair to bounce from the 1.30 to push through 1.31 and it trades just below 1.3150 as of this writing and looks good for more. The dollar weakness is expected to continue in the short term and this is likely to help the pair to move even higher.

Looking ahead to the rest of the day, we have the durable goods data from the US but no economic data from the UK. We expect the London session to continue the reaction to the FOMC meeting minutes which should mean that there would be more selling of the dollar which should then push the GBPUSD pair towards 1.32.