GBP/USD Daily Fundamental Forecast – September 29, 2017

The GBPUSD pair staged a smart recovery during the course of trading yesterday as we saw the dollar on the backfoot all across the board during this period. There was no fundamental reason for the dollar to suffer yesterday, as the news from the US was on expected lines, and so it can only be put down to technicals and some month end flows that seemed to affect the dollar.

GBPUSD Continues to Stay Strong

The pound has been one of the strongest currencies over the last few weeks and we have also mentioned this in some of our forecasts. There is a lingering feeling that the BOE is becoming more and more hawkish and that is helping to support the pound in the short term. This feeling has translated into a notion that the BOE would hike rates in the short term and for its part, the BOE has neither confirmed nor rejected such rumors which means that it remains as an option and the BOE could use it at any time.

We are also seeing the UK PM May deftly handle her domestic troubles as far as the Brexit process is concerned and there is a growing feeling that she would be able to help the UK maintain free market access to the Eurozone once the Brexit is done. This would be a huge boost for the UK economy if she does manage to do that and it is a combination of such events that have been lending support to the pound and it is likely to keep it buoyed in the short term.

Looking ahead to the rest of the day, we do not have any major news from the US but we have the current account data and a speech from the BOE Governor Carney later in the day. Also, today is the last day of the month and hence we are likely to see some month end flows as well which should keep the GBPUSD pair volatile.