GBP/USD Daily Fundamental Forecast – November 1, 2017

The GBPUSD has been moving higher as the market continues to believe that there is a rate hike coming from the BOE tomorrow when the rate announcement and the statement is scheduled to be released. Though we initially felt that that rumors were unfounded, the reaction of the market so far, in pushing up the pound over the last few days, has led us to believe that the rate hike might indeed happen tomorrow.

Much has not changed between now and the time when the rate hike was considered to be a disruptive force in the market which was yet to come to terms with the Brexit process. In fact, the talks for the Brexit continue and since little progress has been made, despite the intervention of the UK PM May, the uncertainty continues to remain. It is under such circumstances that it was believed that the BOE would not want bring in more uncertainty and pressure by way of a rate hike.

GBPUSD Moves Higher on Hope of Rate Hike

Also, the economic fundamentals have also not changed since that time as the data continues to be steady to choppy and this should have ideally led to a situation where the rates would have been on hold. But such is the desperation of the BOE to do something to give confidence and boost the economy that they have probably decided to bring in a rate hike to spur the markets. If this does happen tomorrow, we should see the pair comfortably moving towards the 1.35 region during the short term.

But there is likely to be some more action today as well as we have the manufacturing PMI data from the UK and the ADP employment data from the US. We also have the FOMC meeting and statement later in the day today which the market will be watching for any hint of a rate hike from the Fed in December. If the statement is indeed hawkish, then we could see the dollar moving to its next bullish leg.