GBP/USD Daily Fundamental Forecast – October 10, 2017

It was generally dull trading in the markets yesterday and though the GBPUSD pair rose during the course of the day, not much can be read into it. It was a holiday in the US as well as Canada and hence the liquidity was low almost throughout the day as it was a holiday in Japan as well. The bulls in the pound market, or whatever was left of them, took this opportunity of low liquidity to push the prices higher.

GBPUSD Bounces

They probably wanted to get out of the pound by some means and would have used this opportunity to do so as there was nothing fundamental in the move up in the pound prices. The pound continues to suffer from weak data which is likely to keep the BOE on hold atleast for the short term. Post their meeting last month, there were some genuine hopes of the BOE hiking rates by the end of the year but the weakening data and the political uncertainty should push them back and force them to be on hold.

The political uncertainty does not only involve the Brexit process but it also concerns the continuation of the UK PM May in her position. At this point of time, there are calls for her resignation from within her own party and it remain to be seen how she is going to weather this storm and also maintain focus on the Brexit process. There is also an increasing talk of a no-deal with the Eurozone which could end pretty badly for the UK economy.

A combination of these factors is likely to keep the pound under pressure. As for today, we have the manufacturing production data from the UK while there is no data to be released from the US. With liquidity returning back to the markets, we could expect the dollar to continue to weaken which could help the GBPUSD pair to move higher.