GBP/USD Daily Fundamental Forecast – July 5, 2017

The GBPUSD pair moved towards the low 1.2900s region on a day of slow trading as the US markets were on holiday on account of their Independence day. This did not stop the dollar from where it left off on Monday and though the speed and the strength of the move was largely limited, the direction of the currency movements was pretty much similar to the previous day as the pound steadily lost ground against the dollar.

GBPUSD Corrects

We had warned of such a move in our forecast at the start of the week when the pair was struggling to push through the resistance region at 1.3030. This region had managed to hold several advances over the last few months and so it was pretty clear that there was a large likelyhood that it would do the same this time as well. We have been seeing the GBPUSD pair steadily moving lower during the course of the week as the market buys the dollar in anticipation of the events during the second half of the week.

The FOMC is scheduled to be released later in the evening today and this will be watched very closely by the traders to know what the Fed members think about the current state of the economy and whether they drop any hints for further rate hikes in the near future. If they do, then the dollar is likely to continue on its recover and this could bring the 1.28 region into focus in GBPUSD pretty quickly. There isnt much fundamental stuff driving the pound at this point of time and hence the focus will continue to be on the dollar for the rest of the week.

Looking ahead to the rest of the day, we have the Services PMI data from the UK and with the misses in the PMI data earlier in the week, the pound bulls would hope that there is a bounce in this data point atleast. But more than this, the FOMC is likely to be the bigger market mover though we expect the dollar recovery to hit a roadblock today as the bulls would want to take some profits and wait for the employment report on Friday before buying the dollar again.