GBP/USD Daily Fundamental Forecast – March 29, 2017

GBPUSD took a major hit yesterday as the pair crashed by around 200 pips yesterday on the back of dollar strength across the board and also due to the fact that it was the day before Article 50 is to be invoked. We have been mentioning in our last few forecasts that March 29 (today) is likely to be an interesting one for the pound traders as Article 50 is to be invoked on that date which will formally begin the Brexit process and there will be no going back on that once it is invoked.

GBPUSD Crashes on Brexit “Fears”

We have been seeing that the shorts have been building more and more in the GBPUSD pair for the past week or so, in anticipation of a large fall on March 29 but at the same time, we have been seeing the price move higher and higher towards 1.26. This presented a dangerous combination and we saw a small effect of that yesterday as a combination of dollar strength and fears surrounding the Brexit process pushed the pair from the highs of its range around 1.26 towards 1.2400 and it trades just above that as of this writing.

The dollar gained in strength on renewed hopes that the healthcare bill is likely to be passed in the House as Trump and his team reach out to Democrats with the hope that they would support it. We also saw the UK PM May sign the order for the invocation of Article 50 and it is to be formalised today and it will be interesting to see what happens to GBPUSD following this.

Looking ahead to the rest of the day, we do not have any other major economic events from the US or the UK and so the focus will be firmly on the invocation of Article 50 and the price action in GBPUSD after that. Traders would do well to watch from the sidelines and let the dust settle before jumping into trades in any specific direction.