GBP/USD Daily Fundamental Forecast – March 24, 2017

It was a very tight day of trading as the markets were in a wait and watch mode ahead of the US House vote on the healthcare plan but even in such a market, it was obvious for everyone that the GBPUSD was, by far, the strongest currency pair around. With so many risks and uncertainties around the Brexit process continuing to exist, this strength of the pound should be surprising for many people but it is just a measure of the growing number of shorts in the pair.

GBPUSD Trading Strong

Most of the traders, especially the smaller ones, expect the pound to fall when the Article 50 is invoked on March 29 but what makes us doubt this is the fact that this is something that almost everyone expects and the markets have a capacity to not do what everyone expects. In fact, the markets generally do what most of the traders least expect and that is why this growing number of shorts in anticipation of a fall on March 29, is a matter of concern for us.

Yesterday, we saw the GBPUSD make a break through 1.2500 and trade above that region for a brief while as the UK retail sales data came in much better than expected. This was further proof that the effect of Brexit is yet to sink into the UK economy and it continues to throw up some good numbers. But this move up was quickly corrected and we now see the pair trading just below 1.2500 as of this writing.

The voting in the US House over the new healthcare plan has been delayed and it is reported that it will be held today and this event should be the one dominating the markets for today. We feel that the dollar will strengthen if the plan goes through and then we might see the GBPUSD pair make a move towards 1.24. If the vote fails, then we could see the dollar weakening across the board.