GBP/USD Daily Fundamental Forecast – October 20, 2017

The pound moved higher during the first half of the day as the Brexit talks seemed to have some progress at last. The talks have been going on for a few weeks now but so far, it has been a stalemate with not much progress on any side and there has also been talk of a no deal and that UK would want to walk off such talks and manage the Brexit without the involvement of the Eurozone. Though this does not seem to be a great idea, this was considered a possibility and the pound was under pressure due to this.

GBPUSD Looking Weak

So, the fact that some progress was being made and as much was said by Merkel and the UK PM May in their statements, was heartening for the markets and the GBPUSD pair rose up and broke through the 1.32 region for a brief while. But this run up lasted only till the London fix and once that was completed, there began selling of the pound and the buying of the dollar as well. Though there was nothing fundamental that went wrong as far as the UK was concerned, the selling only showed that the move up was a fake out and since then, the GBPUSD pair has been moving lower.

The pair has weakened further as of today morning as well as the dollar got a boost from the passing of the tax reform bill. This was a bill that was important for Trump and his team to push through, not only to help the US economy but also to help themselves and avoid another failure for their team. The fact that he managed to push it through augurs well for other bills in the pipeline and the market seemed to like it as they went about buying the dollar.

This weakened the pair even further and we now see the pair threatening to push through 1.31 as of this writing. We expect the effect of this news to continue to dominate the markets for the rest of the day and help the dollar to gain in strength during the course of the day. This should place the GBPUSD pair under a lot of pressure and we should be looking at the 1.3060 region for some support. There is no news scheduled to be released from the UK or the US for the day and so it should be all about the dollar for today.