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GBP/USD Daily Fundamental Forecast – March 23, 2017

By:
Colin First
Published: Mar 23, 2017, 03:54 UTC

The big news as far as the pound was concerned was the attack in London where it is understood that a few people were killed and a lot more injured in the

GBP/USD Daily Fundamental Forecast – March 23, 2017

The big news as far as the pound was concerned was the attack in London where it is understood that a few people were killed and a lot more injured in the course of the attack. Under normal circumstances, the markets would have been spooked and we would have seen the GBPUSD pair fall by around 200 pips within the course of an hour.

Time for Pound Bears to be Careful

But it is a measure of the times that we are in, how composed the markets are and how strong the bulls in this pair seem to be that we saw a drop of about 50-60 pips but even this drop was quickly made up within the next couple of hours and the pair now trades just below the crucial mark at 1.2500.

With the Article 50 set to be invoked on 29th March, the short trade on GBPUSD seems to be getting extremely crowded. A lot of traders believe that there is going to be a large fall in the pair once the invocation is done on the 29th and they believe that this bounce towards 1.25 is basically a setup for the large fall and hence the bears are setting themselves up for this fall with large shorts. But on the other hand, the invocation is something that was promised quite sometime ago and the fact that it will be done on 29th is also something that has already been announced. So, unlike what the markets think, there is no surprise factor in this announcement and so it is difficult to believe that the markets would be taken aback when it comes on 29th and would fall.

GBPUSD Hourly
GBPUSD Hourly

There could probably be a knee jerk kind of reaction immediately after the announcement and the pound could fall but we believe that there is likely to be some short squeeze which could push the pair much higher from where it is now. Markets rarely do what they are expected to do and with everyone expecting a fall, it is better to expect the opposite.

Looking ahead to today, we have the retail sales data from the UK and a speech from Yellen which should keep the markets busy and we believe that the GBPUSD pair will consolidate at the highs with a bullish bias.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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