GBP/USD Daily Fundamental Forecast – October 27, 2017

The GBPUSD pair also crashed lower and it is now back to the lows of the week where it is consolidating at this point of time. Though there has not been any fundamentals directly affecting the pound which has led to the move lower, the crash in the euro is indirectly affecting the pound as well, something that we had pointed out in our forecast yesterday.

GBPUSD Moves Lower Along With The Euro

The ECB pulled the rug from under the euro yesterday by extending the QE beyond September 2018 though it did cut down on the QE. This disappointed the bulls and led to a sell off in the euro which seemed to give strength to the dollar as the investors and traders chose to put their bets on the dollar and the Fed after they pulled out of their euro longs. This affected the other dollar related pairs as well and this has led the pound to move lower during the same period. This pushed the GBPUSD pair from above 1.33 to just above 1.31 as of this writing.

The dollar looks as though it might continue to gain in strength in the coming days as the anticipation of a rate hike in December from the Fed continues to grow in a slow manner. Though the incoming data from the US has not yet begun to support the decision as yet, the general hawkishness of the Fed is determining the market reaction at this point of time. Also, the talk that John Taylor, a hawk, could become the next Fed Chair has also improved the outlook for the rate hikes and the dollar as such and this is also helping the dollar to strengthen in the short term.

Looking ahead to the rest of the day, we do not have any major news from the UK but we have the advance GDP data from the US which is likely to give a direction for the dollar in the short term. The pound bulls would hope for some weak data so that they can get some relief but it remains to be seen how long this relief would last, if at all.