GBP/USD Daily Fundamental Forecast – October 3, 2017

The GBPUSD pair has been going through some pretty volatile times of late. While just a couple of weeks back, the bulls were on the rampage as its broke through several resistances on the back of some strong data from the UK and also due to deft moves from both the BOE and the UK government to keep the pound supported. They managed to keep the pound buoyed despite the uncertainty surrounding the Brexit process and this helped the pound move higher.

GBPUSD Hit by Bad Data

But over the last week or so, reality seems to have caught up with the pound as it has been correcting quite fast as all the good work from over the last couple of weeks seem to be unravelling. We have the UK PM May stating that she expects the Brexit process to take a couple of more years and this has disappointed a part of the market that expected it to happen sooner. We also have rumors that the government led by May may not even last that long.

The BOE also seems to be twiddling its thumbs not sure on what it wants to do. And on top of all this, the data from the UK also seems to be slipping over the past couple of weeks or so and the slip in the manufacturing data from the UK yesterday was further evidence of that. This led the GBPUSD pair to move lower and it dropped by over 120 pips during the course of the day as the dollar strength also dominated all across the board yesterday.

Looking ahead to the rest of the day, we have the construction PMI data from the UK while we do not have any major data from the US for the day. The dollar continues to rebound and threatens to bring in a change of trend and this is likely to keep the GBPUSD under pressure during the course of the day as the market awaits bigger data in the latter part of the week.