GBP/USD Daily Fundamental Forecast – October 4, 2017

Like the euro, the pound has also been running around like a headless chicken over the last 24 hours as the market awaits the data from the US. Just like the way that the GBPUSD shot higher for a couple of weeks, it has been correcting lower with almost equal ferocity over the last week or so and so far, there does not seem to be anything that is likely to stop the fall for now.

GBPUSD Sinks Lower

The data that is scheduled to be released over the coming week is likely to be crucial for determining the short term direction for this pair. The data from the UK itself, that has been released since the beginning of the week, has not inspired any confidence among the traders so far. Both the manufacturing and the construction PMI data have missed their mark by a long way so far and this puts into question the hawkishness of the BOE.

With the incoming data being so weak and with the uncertainty over the Brexit process still hanging around, it would not make much sense for the BOE to consider hiking at this point of time and the market is beginning to sense that. There is also a feeling that the effect of the Brexit is beginning to slowly sink into the economy and the effect is not so good so far, as the data shows. It is a combination of these aspects that has been worrying the traders and the effect is the sinking of the pound.

Looking ahead to the rest of the day, we have the services PMI data from the UK and also the ADP Data from the US and hence, we can see some very strong volatility during the course of the day today. If the data from the US comes out stronger, then we could see the pound sink even further.