GBP/USD Daily Fundamental Forecast – September 13, 2017

It was an eventful day for the pound yesterday which saw a lot of volatility and that volatility is likely to continue for the rest of the week which has loads of data and economic events lined from the UK and hence the focus will be on the pound for the whole of the week. We had been mentioning over the past couple of days in our forecasts that the underlying strength of the pound was palpable and it is important for the traders to take note of that.

GBPUSD Shoots Higher on Strong Data

This piece of advice proved to be valuable as the GBPUSD pair shot higher on strong CPI data. But the way that the pair was moving, it looked as though the pound would have moved higher irrespective of what happened as far as the data was concerned. The CPI data came in better than expected and this was what the bulls were waiting for and they carried the pair through the 1.3250 region and the bullishness continued till the end of the day.

The pair now trades comfortably above the 1.33 region and the bullish trend seems to have got another leg for now as the market awaits the BOE tomorrow. The BOE is expected to be hawkish in its tone and this is what is being priced into the markets as of now. Though the BOE did not vote for a rate hike last time and neither is it expected to do so this time as well, it is expected to give a stern message that it will act when it is needed to and with 2 or 3 BOE members expected to vote for a hike, this hawkishness should give further boost to the pound.

Looking ahead to the rest of the day, we have the average earnings index data from the UK and the PPI data from the US, both of which are important pieces of data and hence likely to bring in a lot of volatility in the GBPUSD pair. If the US data comes in weak, then we could see another round of weakness in the dollar which could carry the pair towards the 1.34 region.