GBP/USD Daily Fundamental Forecast – November 2, 2017

The pound awaits the BOE later in the day today and as in any case when a currency awaits an important news event, the pound has been in a consolidation and ranging mode over the last couple of days and this is likely to continue for a large part of the day today as well. The pound bulls are hopeful of a rate hike from the BOE today and that is why we have been seeing the pound buoyant.

GBPUSD Awaits the BOE

The market was in a consolidation mode yesterday as well due to the fact that it was awaiting the FOMC announcement and statement. As was widely expected, the Fed chose to keep the rates on hold and much of the text for the statement also remained the same as last month. This was less than what was expected by the markets and they showed their displeasure by selling off the dollar in a small way immediately after the announcement. But this was later followed by a corrective bounce and it was clear that the dollar was a bit lost for direction. Reports that Powell had been confirmed as the next Fed Chair served to weaken the dollar which helped to keep the pound near the 1.33 region.

But it is clear that the more important day for the pound is today when the BOE makes the rate announcement followed by the statement. Though the data from the UK of late has not been great, the BOE would be considering a rate hike as a means of spurring the UK economy at times of uncertainty which the Brexit process has brought in. If this does happen, then the pound is likely to gain strength during the course of the short term which should help it to move toards 1.34 and 1.35 during this period.

Looking ahead to the rest of the day, there is no major news from the US for today and so the focus of the market would be well and truly on the pound. A lot of volatility is expected post the announcement and traders would be well served by being careful around the time of the announcement.