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GBP/USD Fundamental Analysis – week of April 24, 2017

By:
Colin First
Published: Apr 23, 2017, 08:25 UTC

GBPUSD had a very bullish week as it was boosted by some fundamental news that rocked the markets. The UK PM May made a sudden announcement that was going

GBP/USD Fundamental Analysis – week of April 24, 2017

GBPUSD had a very bullish week as it was boosted by some fundamental news that rocked the markets. The UK PM May made a sudden announcement that was going for a quick poll in June and this pushed the pair, after an initial reaction lower, through 1.26 and then on to 1.27 and 1.28 where it rests to close the week. This was a very surprising move that caught the markets off guard. The traders were expecting the pair to continue to consolidate and range below 1.26 and this move took everyone by surprise as there was not even much rumor on this topic.

Pound Gets a Boost

The initial reaction was to move lower as the markets were taken off guard and they seemed to be a bit confused on why such a thing should happen but later, there was a realisation that it was a very clever move from May to strengthen her position domestically and also within Europe. The opposition is in a disarray and she wanted to make use of this opportunity to get a much stronger mandate than what she had got the previous time. Also, she announced this after the Article 50 had been invoked which means that the UK cannot go back on Brexit.

GBPUSD Weekly
GBPUSD Weekly

So, the upcoming election would not be a mandate on Brexit but would be more about May and her policies. A stronger mandate would also help to strengthen her position when she sits for negotiations on the Brexit process with the Euro leaders. This way, she would be able to extract some good deals for the UK and this is the hope of the UK people as well as the markets. This effect was seen in the pound as it strengthened across the board and continued to stay strong through till the close of the week.

Looking ahead to the rest of the week, we are likely to see Trump announce some major tax cuts in the coming week and it remains to be seen whether there is something good in the details of the plan or whether it is just media fodder. We have the advance GDP from the UK as well as the US and all of these should ensure some good volatility in the coming week.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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